Private ruling: Capital gains tax
Published: March 2014
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Question and answer | Can you disregard the capital gain or capital loss you made upon the sale of your share of the investment property? | No.

Relevant facts and circumstances: You purchased a share in an investment property a number of years ago. Your former spouse was also a co-owner of this property. The consent orders between you and your former spouse state that in the event your former spouse is unable to refinance to secure your release over the property, the property will be sold. Your former spouse was unable to refinance and so the property was sold in the year ended 30 June 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-20. | Income Tax Assessment Act 1997 Section 126-5.

Reasons for decision: Summary: A capital gains tax (CGT) event happens when a CGT asset is disposed of. In your case, a CGT event happened when you sold your share of the investment property. Although the property was sold as a result of the consent orders relating to your divorce from your former spouse, the marriage breakdown rollover relief does not apply to you as this is only available where an asset is disposed of by a taxpayer and transferred to a spouse or former spouse. In your case, the property was sold to a third party and not transferred to your former spouse. There are no other exemptions available in the law that apply in your circumstances to allow you to disregard the capital gain or capital loss that you made upon the sale of the investment property. Therefore, you must include the capital gain or capital loss you made upon the sale of the investment property in your relevant income tax return.