Australia Marriage & Divorce Tax Guide
Australian tax implications of marriage and divorce. The guide covers: the CGT rollover for the asset transfers between the spouses (the "marriage breakdown rollover") — the CGT rollover applies to the transfer of the assets between the spouses (the "spouse" — the "legal spouse" or the "de facto spouse") as the part of the "marriage breakdown" (the "divorce" or the "separation"); the rollover is available under the "Subdivision 126-A" of the "ITAA 1997"; the transfer of the CGT asset (the "CGT asset" — the "shares", the "real estate", the "business assets") between the spouses is "rolled over" — the recipient spouse is treated as the "acquirer" of the asset at the "transferor's cost base" (the "cost base of the transferring spouse"); the CGT rollover applies to: (a) the transfers made under the "court order" (the "Family Court order"), (b) the transfers made under the "binding financial agreement" (the "BFA" — the "financial agreement" under the "Family Law Act 1975"), (c) the transfers made after the "separation" but before the "divorce" (the "de facto separation"); the spouse superannuation contributions (the "spouse contributions") — the spouse (the "contributing spouse") can make the superannuation contributions to the "receiving spouse's" superannuation fund; the contributing spouse can claim the "spouse contribution tax offset" (the "spouse super contribution offset") of up to $540 per year (the "maximum offset" of $540 if the receiving spouse's income is below $37,000 and the contribution is $3,000 or more); the offset is 18% of the lesser of: (a) the "spouse contribution" (up to $3,000), OR (b) the "difference between $40,000 and the receiving spouse's income" (the "income threshold"); the offset is NOT available if the spouse is the "temporary resident" or the "non-resident"; the property settlement (the "property settlement") — the "property settlement" under the "Family Law Act 1975" involves the division of the "matrimonial property" (the "matrimonial assets" — the "family home", the "investments", the "superannuation", the "business assets"); the CGT implications: (a) the "transfer of the assets between the spouses" — the CGT rollover applies (the "marriage breakdown rollover" — no CGT on the transfer), (b) the "sale of the assets to the third party" — the CGT applies (the "CGT event A1" — the capital gain or the loss is shared between the spouses according to the ownership), (c) the "transfer of the main residence" — the "main residence exemption" may continue to apply if the former spouse continues to live in the residence (the "continuing main residence exemption" for the spouse after the divorce under the "Section 118-75" of the ITAA 1997); the "stamp duty" on the property settlement — most states provide the "stamp duty exemption" for the transfers between the spouses under the "marriage breakdown" or the "divorce" (the "spousal transfer exemption"); the child support (the "child support") — the "child support" payments (the "child support" — the "private child support" or the "CSA child support" through the "Child Support Agency") are NOT deductible for the "paying parent" and are NOT assessable for the "receiving parent"; the "maintenance payments" (the "spousal maintenance") are also NOT deductible for the "paying spouse" and are NOT assessable for the "receiving spouse" (the "spousal maintenance" is the "non-assessable non-exempt income" — the "NANE"); the tax offsets for the single parents — the single parents may be eligible for: (a) the "low income tax offset" (the "LITO"), (b) the "senior and pensioners tax offset" (the "SAPTO" if eligible), (c) the "family tax benefit" (the "FTB" — the "non-taxable" — the "Centrelink benefit"), (d) the "child care subsidy" (the "CCS" — the "non-taxable"); the "maintenance and the child support" are included in the "income for the FTB purposes" (the "adjusted taxable income" for the "family tax benefit"). All amounts in Australian Dollars (AUD). For related reading, see our Personal Tax Guide → and Capital Gains Tax Guide →.
CGT Rollover on Divorce
- Transfer between spouses: The transfer of the CGT assets between the spouses under the marriage breakdown is "rolled over". The recipient spouse inherits the "cost base" of the transferor spouse. The CGT rollover is automatic — the taxpayer does NOT need to apply to the ATO.
- Main residence — continuing exemption: If the former spouse continues to live in the "main residence" after the divorce, the "main residence exemption" continues to apply. The exemption is available if: (a) the former spouse is the "owner" or the "co-owner" of the residence, (b) the residence was the "main residence" of the former spouse before the divorce, (c) the former spouse continues to use the residence as the "main residence".
For the stamp duty exemption on the property transfers between the spouses, see our Property Tax Guide →.
Spouse Super Contributions
- $540 offset: The contributing spouse can claim the offset of up to $540 per year (18% of the spouse contribution up to $3,000). The offset is available if: (a) the receiving spouse's income is below $40,000, (b) the contribution is made to the receiving spouse's superannuation fund, (c) the receiving spouse is the "Australian resident".
- Income threshold: The offset phases out between $37,000 and $40,000 (the "income threshold"). The maximum offset of $540 is available if the receiving spouse's income is $37,000 or less and the contribution is $3,000 or more. The offset is NOT available if the receiving spouse's income is $40,000 or more.
For the superannuation splitting on the divorce and the "super splitting" order, see our Superannuation Guide →.