You transfer the asset
If you transfer the asset, the consequences of the rollover are:
- you disregard any capital gain or capital loss for assets acquired before 20 September 1985, and
- for assets acquired on or after 20 September 1985, the marriage or relationship breakdown rollover ensures you disregard any capital gain or capital loss you make from the CGT event that involves you and the transferee spouse.
The asset is transferred to you
Assets acquired before 20 September 1985
If a CGT asset, including a share of a jointly owned asset, was transferred to you because of the breakdown of your marriage or relationship and it was acquired by the transferor before 20 September 1985, you are also taken to have acquired the asset before that date. You disregard any capital gain or capital loss you make when you later dispose of the asset.
However, if you make a major capital improvement to that asset after 20 September 1985, you may be subject to CGT when you dispose of it or another CGT event happens to that asset, see Other capital improvements to pre-CGT assets.
Assets acquired on or after 20 September 1985
The rules are different if the asset was acquired by the transferor on or after 20 September 1985. In this case, if you receive the CGT asset (or a share of a jointly owned asset) and there is a marriage or relationship breakdown rollover, you are taken to have acquired the asset (or share of the asset) at the time it was transferred from your spouse (or the company or trustee).
To calculate your capital gain or capital loss when a later CGT event happens, the first element of your cost base and reduced cost base will be the same as the cost base and reduced cost base of your spouse (or the company or trustee) at the time of the transfer. Your cost base and reduced cost base also include any costs incurred by you or the previous owner (your spouse, the company or trustee) in transferring the particular asset on the breakdown of your marriage or relationship, such as conveyancing costs and stamp duty. General legal costs relating to the breakdown or incurred in seeking a property settlement are not included.
If the transferor’s cost base includes an amount of indexation, you may later have to recalculate the first element of your cost base to exclude that amount if you want to apply the CGT discount to your capital gain.
If you acquired the asset from your spouse (or the company or trustee) before 11.45am (by legal time in the ACT) on 21 September 1999, you may be able to use the indexation method when calculating your capital gain. This can only apply if your and your spouse’s combined period of ownership is 12 months or more (or your and the company’s or trustee’s combined period of ownership is 12 months or more).
If you acquired the asset after 11.45am (by legal time in the ACT) on 21 September 1999, you cannot use the indexation method when calculating your capital gain but you may be able to use the discount method. You can use the discount method to calculate your capital gain if your and your spouse’s combined period of ownership is 12 months or more. If the period is less than 12 months, you use the 'other' method.
Collectables or personal use assets remain collectables or personal use assets when they are transferred from your spouse (or the company or trustee) in the case of a marriage or relationship breakdown rollover.
For information about collectables and personal use assets, see What is a capital gains tax asset?
There are several instances where your spouse (or a company or trustee) may create an asset in your favour. The table below explains how to calculate the first element of your cost base and reduced cost base of that asset in each case.
CGT event |
First element of cost base and reduced cost base |
|---|---|
Creating contractual or other rights (D1) |
Incidental costs incurred by the transferor that relate to the event |
Granting an option (D2) |
Expenditure incurred by the transferor to grant the option |
Granting a right to income from mining (D3) |
Expenditure incurred by the transferor to grant the right |
Granting a lease (F1) |
Expenditure incurred by the transferor on the grant renewal or extension of the lease |
You are taken to have acquired the asset at the time specified by the CGT event. For example, for CGT event D1, you acquire the asset at the time you enter into the contract, or, if there is no contract, at the time the right is created. For more information, see appendix 1.