Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

PART 3-3 - CAPITAL GAINS AND LOSSES: SPECIAL TOPICS

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Division 126 - Same-asset roll-overs

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Subdivision 126-A - Marriage or relationship breakdowns

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SECTION 126-15 CGT event involving company or trustee

126-15(1)
There are the roll-over consequences in section 126-5 if the trigger event involves a company (the transferor ) or a trustee (also the transferor ) and a *spouse or former spouse (the transferee ) of another individual because of:

(a)

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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)

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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

(c) (Repealed by No 144 of 2008)

(d)

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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)

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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)

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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)

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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.

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History

S 126-15(1) amended by No 144 of 2008, s 3 and Sch 14 items 75 to 78, by substituting para (a), substituting " of the Family Law Act 1975 " for " of that Act " in para (b), repealing para (c) and substituting " breakdowns of relationships between spouses " for " de facto marriage breakdowns " in para (f)(i), applicable:

(a) in relation to the 2009 - 2010 income year and later income years; and

(b) to the extent to which the amendments affect the Fringe Benefits Tax Assessment Act 1986 - in relation to the FBT year starting on 1 April 2009 and later FBT years.

Paras (a) and (c) formerly read:

(a) a court order under the Family Law Act 1975 or a corresponding *foreign law; or

(c) a court order under a *State law, *Territory law or *foreign law relating to de facto marriage breakdowns; or

S 126-15(1) amended by No 115 of 2008, s 3 and Sch 2 item 36, by inserting para (da), effective 1 March 2009.

S 126-15(1) amended by No 164 of 2007 , s 3 and Sch 4 item 3, by substituting para (f)(ii), applicable in relation to CGT events that happen on or after 1 July 2007, regardless of when the award, court order or agreement was made. Para (f)(ii) formerly read:

(ii) that, because of such a law, cannot be overridden by an order of a court (except to avoid injustice).

S 126-15(1) amended by No 168 of 2006 , s 3 and Sch 1 item 7, by inserting paras (d) to (f), applicable 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 12 December 2006.

No 168 of 2006 , s 3 and Sch 1 item 11, contains the following transitional provision:

Transitional
11
The reference in paragraph 126-5(1)(e) or 126-15(1)(e) 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 .

126-15(2)

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There are other consequences if:

(a) just before the time of the trigger event, an entity (including the transferee) owned another *CGT asset of a kind covered by this table; and

(b) the entity *acquired it on or after 20 September 1985; and

(c) a *CGT event happens in relation to it.

Relevant CGT assets
Item	For this transferor:	The entity can own these assets:
1	Company	(a)	a *share in the company; or
		(b)	a loan to the company; or
		(c)	an indirect interest (through one or more interposed companies or trusts) in a *share in, or loan to, the company

2	Trustee	(a)	an interest or unit in the trust; or
		(b)	a loan to the trustee; or
		(c)	an indirect interest (through one or more interposed companies or trusts) in an interest or unit in the trust or in a loan to the trustee

Example:

An individual owns all the shares in a company. The company owns land. The individual ' s marriage breaks down. A court orders that the company transfer the land it owns to the individual ' s spouse. The individual later sells the shares.

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126-15(3)

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The *cost base and *reduced cost base of the other asset are reduced by an amount that reasonably reflects the fall in its *market value because of the trigger event. The reduction occurs at the time of the trigger event.

126-15(4)
If the entity owning the other asset is also the transferee, the *cost base and *reduced cost base of the other asset are then increased by any amount that is included in the entity ' s assessable income for any income year because of the trigger event.

Note:

The reduced cost base may be modified for a roll-over happening after a demerger: see section 125-170 .

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126-15(5)

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

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