Income tax: capital gains: if a court order in the context of Subdivision 126-A of the Income Tax Assessment Act 1997 varies or sets aside an earlier order of the court, does the later court order operate retrospectively or prospectively?

The answer depends on the terms of the court order. In the absence of clear words to the contrary, a later court order should be given only prospective application.

If: (a) a CGT event involving an individual and their spouse happens because of a court order under the Family Law Act 1975; (b) roll-over is provided under section 126-5 or 126-15 of the Income Tax Assessment Act 1997 (ITAA 1997); and (c) a later court order varies or sets aside the original court order, the later court order operates only prospectively (unless the order otherwise directs).

If a later court order sets aside an earlier court order and, as a result, there is a re-transfer of a CGT asset, there is roll-over under section 126-5 or 126-15 of the ITAA 1997 for the re-transfer.