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The capital gains tax roll-over relief available in ITAA
1997 on marriage breakdown will be extended to assets
transferred to a spouse or former spouse under:
- a binding financial agreement under the Family Law
Act 1975 or a similar agreement under a corresponding
foreign law
- an arbitral award under the Family Law Act or a
corresponding award made under a corresponding state,
territory or foreign law, and
- a written agreement under a state, territory or foreign
law relating to de facto marriage breakdowns where the
agreement is similar to a binding financial
agreement.
Under the current law, a compulsory same-asset roll-over
happens if a CGT event involves an individual disposing of an
asset to, or creating an asset in, his or her spouse or former
spouse because of: (a) a court order under the Family Law
Act or a corresponding foreign law, (b) a court-approved
maintenance agreement or a similar agreement under a foreign
law, or (c) a court order under a state, territory or foreign
law relating to de facto marriage breakdowns.
Binding financial agreements, arbitral awards and written
agreements allow spouses to settle property issues without
involving the courts. Extending the scope of the CGT roll-over
relief is intended to encourage separating couples to settle
their own affairs, avoiding potential costly and protracted
litigation.
Two related amendments will also be made.
The first will ensure that the CGT main residence exemption
interacts more appropriately with the marriage breakdown
roll-over. It will apply where the transferor spouse acquired
the dwelling (or relevant interest in the dwelling) on or
after 20 September 1985 and a marriage breakdown roll-over is
available to the transferor. The amendment will take into
account the way in which both the transferor and transferee
spouses use the dwelling when determining the transferee
spouse's eligibility for the main residence exemption.
The second amendment will ensure that marriage breakdown
cash settlements do not give rise to CGT liabilities.
The amendments will apply to CGT roll-overs, and CGT events
relating to cash settlements, taking place after the date of
Royal Assent of the enabling legislation.
Source: Budget Paper No 2, p 14; Minister for Revenue
and Assistant Treasurer's Press Release, 10 May 2005.
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