Does a property settlement trigger CGT in Australia?

Transferring assets between spouses under a formal property settlement following marriage breakdown does not immediately trigger CGT. The ATO provides a CGT rollover for transfers made under a court order or binding financial agreement. This means the asset passes at its original cost base rather than at market value, deferring any CGT until the receiving spouse eventually disposes of the asset.

The rollover applies whether the transfer is of real property, shares, or other CGT assets. It does not apply if the transfer is made as part of a testamentary gift or without a formal agreement. Both parties need to make a choice to apply the rollover; it is not automatic in all situations, but in practice the ATO treats it as applying by default for qualifying transfers.

Once the receiving spouse owns the asset, CGT is calculated from the original acquisition date and original cost base when they eventually sell. The 12-month holding period for the CGT discount is also measured from the original acquisition date. If the property was the main residence of either spouse at any point, the main residence exemption rules become complex and professional advice is worth seeking.