1031R Transfers of assets where relationship between cohabitants ends

Summary

This section provides rules for the treatment of disposals where the relationship between cohabitants ends and subsequent disposals of any assets which had previously been disposed of between cohabitants.

Details

Disposals of certain assets where relationship between cohabitants ends

(1) Where assets are disposed of by one cohabitant to another cohabitant following the ending of a relationship between those cohabitants under an order made under section 175 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010, then, subject to subsections (2) and (3), the asset is treated as having been disposed of at a price which gives rise to no gain or loss.

(2) The no gain/loss rule does not, however, apply if the cohabitant who acquires the asset from the other cohabitant could not be taxed in the State for the year of assessment in which the acquisition took place on a disposal of the asset in that year and a gain had accrued on that disposal. Such a scenario might arise where the taxing rights on such a disposal, under a Double Taxation Agreement, rested with a foreign jurisdiction.

Relief disallowed for trading stock

(3) The no gain/no loss treatment provided for in subsection (2) does not apply if the asset disposed of is one which formed part of the trading stock of the cohabitant making the disposal. Likewise, that treatment does not apply if the asset is one which is acquired as trading stock for the purposes of a trade carried on by the cohabitant who receives it. In each such case, the actual consideration is taken into account and the rules for computing trading income generally apply.

Subsequent disposal

(4) Where the no gain/no loss treatment provided in subsection (1) applies in relation to the disposal of an asset and the cohabitant who acquired the asset subsequently disposes of it (not being a disposal to which that subsection applies), he/she is treated as if he/she had acquired it at the time and cost at which it was originally acquired by the other cohabitant.

Relevant Date: Finance Act 2021