Here's one I heard recently. I need to follow it up more so don't take my word for it.
If an asset is sold due to seperation, the CGT is possibly exempt.
I'll let you guys know when I've done some more research on the subject. I personally have my doubts on the validity, but……
CATA
Asset Protection Specialist
Hi there
I think you will find if a property needs to be sold due to a separation which is evidenced by an agreement between the parties which is recognised by the family court – you have a situation which allows a rollover of any CGT -see the link for the relevant circumstanceshttp://www.ato.gov.au/businesses/content.asp?doc=/content/22313.htm&page=12
Yes, it is true to a certain extent at least. The family assets can be transfered between spouses without CGT, but I believe that teh CGT consequences remain – it is as if the receiving spouse had the asset the whole time.
So those contemplating divorce, or a separation should be careful about which assets they receive. One getting the former main home may have a exempt asset, while the one receiving an investment property may be hit with a huge CGT bill down the track.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thats what I found out today. It needs to be a family court order.
Oh well……Cata
Things changed in Dec last year. A court order is no longer needed for CGT relief on the transfer of assets between spouses (including defactos) on the breakdown of their relationship.
See the March "Tax Agent" magazine from the ATO:
http://www.ato.gov.au/content/downloads/js7009_Taxagent_news_w.pdfTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terry but the Assets are not being transfered between spouces, but sold
Oops, Sorry I misunderstood.
Maybe there are still ways to reduce CGT by moving the assets into the hands of the lwoer income spouse before the final sale?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
That could potentially have tax issues after a seperation eg. who pays if the you have the title in the lower income earner's name. Is the high income earner liable for the tax if the title isn't in their name? I would think not. So the low income earner gets slugged with all or most of the tax billwhile still having to split the profit.
It also could trigger child support issues as the low income earner now is not on such a low income, but still has to spilt the profit from the sale. And family payment issues as the forcasted income is now more and a potential bill comming to repay the funds.
It looks all good for the high income earner but not so rosy for the low income earner.
Not to worry, I'll sort it out.
It creates some interesting times…
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