1031O Transfers of assets where civil partnership dissolved

Summary

This section provides that where a person who has obtained a decree of dissolution under Part 12 of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 disposes of certain assets pursuant to a court order under that Act to his or her former civil partner, a charge to capital gains tax does not arise. The section also provides that where the former civil partner to whom the disposal is made subsequently disposes of the asset, he/she is treated as having acquired it at the same time and cost as the other civil partner.

Details

Disposals of certain assets where civil partnership dissolved

(1) Where one civil partner disposes of an asset to the other civil partner by virtue of or in consequence of —

• an order made under Part 12 of the Civil Partnership and Certain Rights and Obligations Cohabitants Act 2010, on or following the granting of a decree of dissolution, or a dissolution deemed under section 5(4) of that Act to be a dissolution under section 110 of that Act, or
• a deed of separation, agreement, arrangement or other legally enforceable arrangement as a result of the civil partners are living separately and apart in such circumstances that the separation is likely to be permanent,

then, subject to subsection (3), the asset is treated for the purposes of the Capital Gains Tax Acts as having been disposed of at a price which gives rise to no gain or loss to the civil partner making the disposal.

(2) The no gain/loss rule does not, however, apply if the civil partner who acquires the asset (from the other civil partner) 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 (1) does not apply if the asset disposed of is one which formed part of the trading stock of the civil partner 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 civil partner receiving 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 civil partner 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 civil partner.

Relevant Date: Finance Act 2021