Private ruling: Marriage breakdown rollover
Ruling period: Year ending 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Does the marriage breakdown rollover apply where you and your spouse enter into a binding financial agreement to transfer property? | A1: Yes

Relevant facts and circumstances: You and your spouse have separated and there is no likelihood of reconciliation. You and your spouse are in the process of drawing up a binding financial agreement made under Part VIII of the Family Law Act 1975 The proposed agreement will outline the following properties will be transferred to you: A residential/rental property which is owned by the family company in which shares are owned by you, your spouse and your two adult children. Shares owned by the family company that was acquired post 20 September 1985.

Relevant legislative provisions: Subdivision 126A of The Income Tax Assessment Act 1997 Section 102-20 of The Income Tax Assessment Act 1997

Reasons for decision: Summary: Section 126-5 of the Income Tax Assessment Act 1997 outlines that if an asset or an interest in an asset is transferred by a person to their spouse as a result of the breakdown of their marriage or relationship; rollover applies provided certain conditions are met. The conditions include that the transfer has to happen because of a court order, a binding financial agreement made under Part VIIIA of the Family Law Act 1975, an arbitral award or a binding agreement or award relating to the break down of relationships between spouses. Subsection 126-5(2) of ITAA 1997 outlines there must be a relevant CGT event such as A1 and B1 (a disposal case) and CGT events D1, D2, D3 and F1 (a creation case). For transfers that happen because of a binding financial agreement, an arbitral award or binding agreement or award relating to the breakdown of relationships between spouses, rollover only applies if the CGT: · Event happens after 12 December 2006 · The spouse involved are separated · There is no reasonable likelihood of cohabitation being resumed and · The transfer happened because of reasons directly connected with the breakdown of the marriage. You and you spouse are separated and there is no reasonable likelihood of reconciliation. You will enter into a binding financial agreement under the Family Law Act 1975. Under the arrangement the property transfer will result in a relevant CGT event happening. Accordingly the marriage breakdown rollover will apply to you.

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