Pre-CGT assets and family law
In the separation process, spouses may seek, or may be ordered to resolve their financial settlement through a conciliation process before the property settlement takes place. During this conference, both present and future taxation of the relationship’s assets are usually relevant factors in the settlement negotiations. This is notwithstanding that the Family Court may not give such factors weighting during the actual property settlement hearings.
For this reason, it is important to recognise when an asset may be subject to tax should it be disposed of in the future, as it can affect how the relationship’s asset pool are agreed to be divided. Importantly, as was the case in Kerr & Christie (2021) FamCA 624, an asset may be exposed to taxation even if it was acquired before the introduction of capital gains tax (CGT) on 20 September 1985 (a pre-CGT asset).