Capita gains tax (‘CGT’) is the tax you pay on profits made from the sale of a capital asset, such as real estate, shares or businesses. While the family home (principal place of residence) is usually exempt, investment properties and other assets may trigger CGT upon sale.
In family law proceedings, CGT is not usually triggered at the time of the transfer between parties, instead rollover relief is applied, which allows the CGT liability to be deferred until the asset is sold in the future.
Courts do not always include a liability for anticipated CGT when determining the property pool, unless:
- A sale is imminent, or
- There is clear evidence the asset will likely be sold in the near future, and
- The CGT amount is quantifiable.
In the recent case, Marlin & Henson [2025] FedCFamC1A 71, The Full Court upheld the original ruling refusing the deduction of CGT from the property pool, as there was no certainty of sale. This confirmed that “hypothetical” future CGT is not routinely considered in property pool calculations.
Family lawyers are not taxation experts, and you should obtain specific advice from a tax lawyer or accountant as to whether you are likely to trigger CGT in the future or as a result of a family law property settlement.