Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 126.5

  (1)   There is a roll - over if a * CGT event (the trigger event ) happens involving an individual (the transferor ) and his or her * spouse (the transferee ), or a former * spouse (also the transferee ), because of:

  (a)   a court order under the Family Law Act 1975 or under a * State law, * Territory law or * foreign law relating to breakdowns of relationships between spouses; or

  (b)   a maintenance agreement approved by a court under section   87 of the Family Law Act 1975 or a corresponding agreement approved by a court under a corresponding * foreign law; or

  (d)   something done under:

  (i)   a financial agreement made under Part   VIIIA of the Family Law Act 1975 that is binding because of section   90G of that Act; or

  (ii)   a corresponding written agreement that is binding because of a corresponding foreign law; or

  (da)   something done under:

  (i)   a Part   VIIIAB financial agreement (within the meaning of the Family Law Act 1975 ) that is binding because of section   90UJ of that Act; or

  (ii)   a corresponding written agreement that is binding because of a corresponding foreign law; or

  (e)   something done under:

  (i)   an award made in an arbitration referred to in section   13H of the Family Law Act 1975 ; or

  (ii)   a corresponding award made in an arbitration under a corresponding State law, Territory law or foreign law; or

  (f)   something done under a written agreement:

  (i)   that is binding because of a State law, Territory law or foreign law relating to breakdowns of relationships between spouses; and

  (ii)   that, because of such a law, prevents a court making an order about matters to which the agreement applies, or that is inconsistent with the terms of the agreement in relation to those matters, unless the agreement is varied or set aside.

  (2)   Only these * CGT events are relevant:

  (a)   CGT events A1 and B1 (a disposal case ); and

  (b)   CGT events D1, D2, D3 and F1 (a creation case ).

Note:   The full list of CGT events is in section   104 - 5.

  (3)   However, there is no roll - over if:

  (a)   the * CGT asset involved is * trading stock of the transferor; or

  (b)   for * CGT event B1--title in the CGT asset does not pass to the transferee at or before the end of the agreement.

  (3A)   There is no roll - over because of paragraph   (1)(d), (da) or (f) unless the conditions set out in section   126 - 25 are met.

  (4)   A * capital gain or a * capital loss the transferor makes from the * CGT event is disregarded.

Consequences for the transferee (disposal case)

  (5)   For a disposal case where the transferor * acquired the asset on or after 20   September 1985:

  (a)   the first element of the asset's * cost base (in the hands of the transferee) is the asset's cost base (in the hands of the transferor) at the time the transferee acquired it; and

  (b)   the first element of the asset's * reduced cost base (in the hands of the transferee) is worked out similarly.

Example:   Your spouse transfers land to you because of a court order under the Family Law Act 1975 . Any capital gain or loss your spouse makes is disregarded.

  If the land's cost base at the time you acquired it is $10,000, the first element of the land's cost base in your hands becomes $10,000.

Note 1:   There are special indexation rules for roll - overs: see Division   114.

Note 2:   A roll - over under this Subdivision may have an effect on the transferee's main residence exemption: see sections   118 - 178 and 118 - 180.

  (6)   For a disposal case where the transferor * acquired the asset before 20   September 1985, the transferee is taken to have acquired it before that day.

Note:   A capital gain or loss you make from a CGT asset you acquired before 20   September 1985 is generally disregarded: see Division   104. This exemption is removed in some situations: see Division   149.

  (7)   For a disposal case where the transferor * disposed of a * collectable or * personal use asset, the transferee is taken to have * acquired one.

Note 1:   Capital losses from collectables can be subtracted only from capital gains from collectables: see section   108 - 10.

Note 2:   Capital losses from personal use assets are disregarded: see section   108 - 20.

Consequences for the transferee (creation case)

  (8)   For a creation case, the first element of the asset's * cost base (in the hands of the transferee) is the amount applicable under this table. The first element of its * reduced cost base is worked out similarly.

    The expenditure can include giving property: see section   103 - 5.