Income tax: capital gains: if a court makes an order under the Family Law Act 1975 declaring or altering a spouse's interest in property, do CGT events happen to CGT assets of the spouse for the purpose of section 126-5 or 126-15 of the Income Tax Assessment Act 1997?

If a court makes an order under subsection 78(2) of the Family Law Act 1975 (FLA 1975) giving effect to a declaration under subsection 78(1) of the FLA 1975 of a spouse's interest in property, no CGT event happens. The court order merely recognises existing interests in the property. There is no roll-over under section 126-5 of the Income Tax Assessment Act 1997 (ITAA 1997) or section 126-15 of the ITAA 1997 because no CGT event happens.

If a court makes an order under section 79 of the FLA 1975 altering the interests of a spouse in property, a CGT event can happen because of the order. For example, the court might order an individual to dispose of their interest in the property to their spouse. When the individual disposes of a CGT asset in accordance with the order, CGT event A1 happens because of the court order.

Whether or not a CGT event happens because of an order under section 79 of the FLA 1975 depends on the terms of the order made by the court.

A party might bring an action at law or in equity relying on contract, property or equity (particularly resulting trust or constructive trust) principles. If the court makes an order in such an action affecting the interests of a spouse, there is no roll-over under section 126-5 or 126-15 because: * the court order is not under the FLA 1975 or a corresponding foreign law; * there is no maintenance agreement approved by a court under section 87 of the FLA 1975 or a corresponding agreement approved by a court under a corresponding foreign law; or * the court order is not under a State, Territory or foreign law relating to de facto marriage breakdowns.