Income tax: capital gains: if a CGT asset is transferred by agreement between spouses and a court order later sanctions its transfer, was the original transfer of the asset made 'because of' the court order in terms of section 126-5 or 126-15 for roll-over to apply?

No. A CGT asset transferred between spouses by agreement, before a court order made under the Family Law Act 1975 or a State, Territory or foreign law relating to de facto marriage breakdowns, is not transferred 'because of' the court order. The court order does not cause the CGT event (the transfer) to happen. Therefore, there is no roll-over under section 126-5 or 126-15 of the Income Tax Assessment Act 1997 for the CGT event that happens on the original transfer of the asset.

You need to distinguish between a transfer of a CGT asset between spouses by agreement (as a result of which there is a change of ownership of the asset) and a spouse giving possession of a CGT asset to the other spouse. If possession only is given and there is no provision by which title in the asset will or may pass, no roll-over is needed at that stage because no CGT event happens. If possession only is given and a court order later sanctions transfer of the asset involved, CGT event A1 would happen because of the court order and roll-over would apply.

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.