Private ruling: Capital gains tax - marriage breakdown and disposal of property
Published: May 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Question: Are you liable for capital gains tax (CGT) on the disposal of the property? | Answe r: No.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. Approximately six years ago you purchased an investment property for $X. You were the director of a company. The following year the property was signed over to your former spouse, as part of a binding financial agreement (the agreement) between you and your former spouse. At the time of transfer the property was valued at $X. Under the agreement you signed over the company directorship to your former spouse. The following year the property ceased to be an investment property. Renovations were undertaken with funds provided by an additional mortgage taken out in joint names. The property was the only property you and your former spouse owned. Approximately three months later you and your former spouse moved in and established the property as your main residence. Approximately two years later as the result of your marriage breakdown, your former spouse moved out of the property. You continued to reside in the property until its disposal. Early last year following your former spouse's refusal to dispose of the property as required by a new binding financial agreement between you and your former spouse, a federal magistrate ordered that the property be disposed of. Later in the year the property was sold as directed under the court order for $X. Early this year the Australian Security and Investments Commission de-registered the company. A month later a federal magistrate ordered the equity from the disposal of the property be transferred to you.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-20 | Income Tax Assessment Act 1997 Section 104-10

Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. CGT is the tax you pay on certain gains you make. You make a capital gain or a capital loss as a result of a CGT event happening to an asset in which you have an ownership interest. You have an ownership interest in a property if: · you have a legal or equitable interest in the land which the dwelling is erected upon; and · you have a right or licence to occupy the dwelling. In your case, you do not have an ownership in the property at the time of its disposal as the property was transferred to your former spouse as part of the agreement. Therefore, you are not liable for the capital gain or capital loss made on the disposal of the property. Note: The marriage breakdown rollover provisions do not apply where you do not have an ownership interest in a property.