Family Law and Tax Exemptions

When property is transferred as a result of Orders made by the Family Court, Capital Gains Tax (CGT) can be deferred until the property is ultimately disposed of. This means that CGT usually doesn’t apply to any property transferred in a family law matter.

What is CGT?

CGT is a tax imposed on most disposals of assets acquired after 20 September 1985. Property subject to CGT includes real estate, shares and cryptocurrency. There is an exemption for personal assets, such as your main residence. When a non-exempt asset is sold, the difference between the initial purchase price and eventual sale price is calculated (the ‘gains’) and CGT becomes payable on this amount.

CGT Exemption

In family law matters, there are often a number of transfers totalling a large amount of money. If applied, CGT would impose a significant burden on parties transferring property. Fortunately, in family law cases CGT is not immediately payable on the transfer of assets from one party to another when the assets are transferred pursuant to a Financial Agreement or Court Order. The asset/s will be subject to rollover relief, meaning that although CGT is not immediately payable, it will be applied if and when the asset is ultimately disposed of in the future.

If you need any assistance with your family law matter, please contact us on (02) 9688 6023.

This is not legal advice.