Issue
Is roll-over relief available under subsection 126-140(2) of the Income Tax Assessment Act 1997 (ITAA 1997) where a member of a superannuation fund transfers their original interest to another superannuation fund?
Decision
No. Roll-over relief is not available to the trustee of the original superannuation fund under subsection 126-140(2) of the ITAA 1997, where a member of a superannuation fund transfers their original interest to another superannuation fund.
Facts
A taxpayer and their former spouse both had interests in a self-managed superannuation fund.
On the breakdown of their marriage, a portion of the former spouse's interest in the superannuation fund was transferred to the taxpayer. The taxpayer, as a consequence had two interests in the superannuation fund; the taxpayer's original interest and the interest transferred from the former spouse.
The taxpayer transferred all their interests in a self-managed superannuation fund (the original superannuation fund) to another self-managed superannuation fund.
Reasons for Decision
Subsection 126-140(2) of the ITAA 1997 allows a capital gains (CGT) tax roll-over to a superannuation fund where (a) an interest in a complying superannuation fund with four or less members is subject to a payment split; and (b) as a result of the payment split, there is a transfer or roll-over of benefits, for the benefit of the non-member spouse, from the complying superannuation fund to another complying superannuation fund; and (c) the transfer of benefits is under provisions of the Superannuation Industry (Supervision) Regulations 1994 dealing with superannuation interests that are subject to payment splits; and (d) the trustee of the first fund subsequently transfers a CGT asset to another small superannuation fund for the benefit of the non-member spouse.
The member's original superannuation interest is not subject to a payment split, as defined in section 90MD of the Family Law Act 1975 . Subdivision 126-D of the ITAA 1997 does not therefore provide CGT relief on the transfer of a CGT asset in satisfaction of a member's original superannuation interest between funds upon marriage breakdown.
As a consequence, the capital gain or loss made by the trustee of the original superannuation fund from the transfer of a CGT asset, in satisfaction of the taxpayer's original superannuation interest, to the trustee of another superannuation fund is not disregarded.