Private ruling: CGT disposal of property
Date of advice: 16 March 2026
Published: 29 June 2026
Ruling period: Year ended 30 June 2025
Date scheme commenced: 1 July 2024

Ruling: Q1: Will the market value substitution rule apply to the disposal of the property? | A1: Yes. | Q2: Will a net capital gain that arose on the transfer of the property to your relative be included in your assessable income? | A2: Yes.

Relevant facts and circumstances: You purchased the property several years ago. You were ordered to transfer your interest in the property to your relative as per a court order. You received no consideration for the transfer of your interest in the property to your relative. On the date of transfer of your interest in the property the market value exceeded the cost base of the property.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 116-10 | Income Tax Assessment Act 1997 section 116-30 | Income Tax Assessment Act 1997 section 102-5

Reasons for decision: Summary: Special rules apply if you receive no capital proceeds for the disposal of a property. Such a transaction requires modification to the capital proceeds used to calculate your capital gain or loss (section 116-30 of the Income Tax Assessment Act 1997 (ITAA 1997)). The market value substitution rule, broadly, is where you are taken to have received the market value of the asset. The market value of the asset is worked out at the time the CGT event happens. Where the market value of an asset needs to be determined an individual can obtain it by several means such as: • a qualified valuer, or • compute their own valuation based on reasonable objective and supportable data. The ATO has released a publication titled Market valuation for tax purpose, which is available at www.ato.gov.au You will make a capital gain if the market value at the time of the event (change of ownership of the property) exceeds the cost base of the property and you will make a capital loss if the market value at the time of the event is less than the reduced cost base. In your case, you were required to transfer your interest in the property to your relative as per a court order for no consideration. Consequently, the market value substitution rule will apply, and you will be taken to have received the market value of the property at the time of the property being transferred to your relative, CGT event A1. The Commissioner has no discretion to allow any exemptions in relation to the capital gain and there is no legislation that specifically disregards the capital gain.