Commonwealth Consolidated Acts Commonwealth Consolidated Acts
Income Tax Assessment Act 1997
1 At the end of Subdivision 118 - A
Add:
118 - 75 Marriage breakdown settlements
(1) A * capital gain or * capital loss you make as a result of * CGT event C2 happening is disregarded if:
(a) you make the gain or loss in relation to a right that directly relates to the breakdown of a marriage or de facto marriage; and
(b) at the time of the CGT event:
(i) you and your * spouse or former spouse are separated; and
(ii) there is no reasonable likelihood of cohabitation being resumed.
Example: Maude receives an amount from Claude by way of a settlement directly related to the breakdown of their marriage. CGT event C2 would happen to Maude on satisfaction of her legally enforceable right to the amount. Any capital gain or loss that Maude makes in these circumstances is disregarded.
(2) For the purposes of this section, the question whether * spouses or former spouses have separated is to be determined in the same way as it is for the purposes of section 48 of the Family Law Act 1975 (as affected by sections 49 and 50 of that Act).
2 Before section 118 - 180
Insert:
Roll - overs under Subdivision 126 - A
118 - 178 Previous roll - over under Subdivision 126 - A
(1) This section applies to you if:
(a) you * acquired an * ownership interest in a * dwelling from another person (your former partner ) as a result of a * CGT event (the earlier event ); and
(b) your former partner acquired the ownership interest on or after 20 September 1985; and
(c) there was a roll - over under Subdivision 126 - A (marriage breakdown roll - over) for the earlier event; and
(d) a CGT event (the later event ) happens in relation to the ownership interest.
(2) This Subdivision applies to the later event in the way that it would if:
(a) your * ownership interest had commenced when your former partner's ownership interest commenced (the acquisition time ); and
(b) from the acquisition time until the time your former partner's ownership interest ended:
(i) you had used the * dwelling in the same way that your former partner used it; and
(ii) the dwelling had been your main residence for the same number of days as it was your former partner's main residence.
Example 1: Peter (the transferor spouse) is the 100% owner of a dwelling that he uses only as a main residence before transferring it to Susan (the transferee spouse). Susan uses the dwelling only as a rental property.
Susan will be eligible for a partial main residence exemption having regard to how both Peter and Susan used the dwelling.
Example 2: Caroline (the transferor spouse) is the 100% owner of a dwelling that she uses only as a rental property before transferring it to David (the transferee spouse). David uses the dwelling only as a main residence.
David will be eligible for only a partial main residence exemption having regard to how both Caroline and David used the dwelling.
3 At the end of subsection 126 - 5(1)
Add:
; 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
(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 de facto marriage breakdowns; and
(ii) that, because of such a law, cannot be overridden by an order of a court (except to avoid injustice).
4 After subsection 126 - 5(3)
Insert:
(3A) There is no roll - over because of paragraph (1)(d) or (f) unless the conditions set out in section 126 - 25 are met.
5 Subsection 126 - 5(5) (note)
Omit "Note", substitute "Note 1".
6 At the end of subsection 126 - 5(5)
Add:
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.
7 At the end of subsection 126 - 15(1)
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; 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
(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 de facto marriage breakdowns; and
(ii) that, because of such a law, cannot be overridden by an order of a court (except to avoid injustice).
8 At the end of section 126 - 15
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(5) There is no roll - over because of paragraph (1)(d) or (f) unless the conditions set out in section 126 - 25 are met.
9 At the end of Subdivision 126 - A
Add:
126 - 25 Conditions for the purposes of subsections 126 - 5(3A) and 126 - 15(5)
(1) The conditions referred to in subsections 126 - 5(3A) and 126 - 15(5) are that:
(a) at the time of the trigger event:
(i) the * spouses, or former spouses, involved are separated; and
(ii) there is no reasonable likelihood of cohabitation being resumed; and
(b) the trigger event happened because of reasons directly connected with the breakdown of the marriage or de facto marriage.
(2) For the purposes of this section, the question whether * spouses or former spouses have separated is to be determined in the same way as it is for the purposes of section 48 of the Family Law Act 1975 (as affected by sections 49 and 50 of that Act).
10 Application
(1) The amendment made by item 1 of this Schedule applies to CGT events that happen after the day on which this Act receives the Royal Assent.
(2) The amendments made by items 2 to 9 of this Schedule apply to CGT events that:
(a) are trigger events for the purposes of Subdivision 126 - A of the Income Tax Assessment Act 1997 ; and
(b) happen after the day on which this Act receives the Royal Assent.
11 Transitional
The reference in paragraph 126 - 5(1)(e) or 126 - 15(1)(e) of the Income Tax Assessment Act 1997 to section 13H of the Family Law Act 1975 includes a reference to section 19D or 19E of that Act as in force immediately before the commencement of item 36 of Schedule 4 to the Family Law Amendment (Shared Parental Responsibility) Act 2006 .