Income tax: capital gains: does a CGT event happen for the purposes of section 126-5 or 126-15 of the Income Tax Assessment Act 1997 because of a court order, if the order directs:(a) a transfer of non-specific matrimonial property; or (b) a transfer of specific CGT assets?

The answer to both questions is 'Yes'.

Most commonly, a court order under the Family Law Act 1975 directs that specific assets be transferred to a spouse. A CGT event happens for each CGT asset specified and it happens because of the court order. Similarly, if a court order directs a transfer of non-specific property, a CGT event happens for each CGT asset involved and it happens because of the court order.

A CGT event happens 'because of' a court order if the CGT event is caused by the court order.

A court order under the Family Law Act 1975 might direct an individual to transfer 60% of their shares, or shares to a value of $100,000, to their spouse. The individual may choose which shares to transfer and, on their transfer, CGT event A1 (about disposals of CGT assets) in section 104-10 of the Income Tax Assessment 1997 happens because of the court order. On the other hand, the court may order that a particular or a defined parcel of shares be transferred. Again, CGT event A1 happens because of the court order.

We invite you to comment on this Draft Taxation Determination. We are allowing 4 weeks for comments before we finalise the Determination. If you want your comments considered, please provide them to us within this period. Comments by Date: 15 September 1999 Contact officer details have been removed following publication of the final ruling.