Mr. Smith is getting a divorce. There is a company with joint ownership between the husband (Mr.
Smith) and the wife (Mrs Smith).
Mr. Smith wants his wife to sell her shares. Is there a special rollover relief that Mr. and Mrs. Smith
can use when they get a divorce?
Normally capital gains tax (CGT) applies to any change of ownership of an asset. However, if you
transfer an asset to your spouse because of the breakdown of your marriage or relationship, you may
be eligible for a rollover of the asset.
‘Rollover’ means the transferor spouse disregards the capital gain or loss that would otherwise arise.
In effect, the person who receives the asset (the transferee spouse) will make the capital gain or loss
when they subsequently dispose of the asset. The cost base of the asset is also transferred to the
Generally, the rollover applies if:
• ownership of an asset, or a share in a jointly owned asset, is transferred between you and your
spouse, or from a company or trust to one of you
• the transfer of ownership is because of a court order, formal agreement such as a binding
financial agreement or award.
In this case:
1. If Mrs. Smith transfer her shares to Mr. Smith, any capital gain or loss Mrs. Smith makes is
disregarded, and Mr. Smith gets the shares with the same cost base.
2. If Mrs. Smith sells the shares in the company back to the company (i.e., other than the husband)
then this rollover would not generally apply, although there might be scoped to apply other concessions
such as the CGT discount and/or small business CGT concessions if certain conditions can be met.