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FB 12: Pension payments to former partners
or “Former business partners' pensions may be paid to others after separation”
You could also call this:

“Rules for taxing trading stock transferred in relationship property settlements”

When trading stock is transferred as part of a relationship property settlement, this is how it’s treated for tax purposes:

If you used the trading stock in your business and had it at the start of the transfer year, it’s treated as if you sold it and the other person bought it. The price is the higher of two values: what it was worth at the end of the year before the transfer, or what it’s worth to the new owner at the end of the transfer year.

If you used the trading stock in your business but got it during the transfer year, it’s treated as if you sold it and the other person bought it for the same price you paid for it.

If you didn’t use the trading stock in a business, it’s treated as if you sold it and the other person bought it for the price you paid for it.

If the new owner doesn’t use the trading stock in a business but later sells it, it’s treated as if they did use it in a business.

These rules don’t apply to farm animals unless they’re part of a dealing business.

These rules are more important than some other rules about selling trading stock for less than it’s worth.

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Next up: FB 14: Specified livestock

or “Rules for transferring farm animals during a relationship property settlement”
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Part F Recharacterisation of certain transactions
Transfers of relationship property

FB 13Trading stock

  1. This section applies for the purposes of subpart EB (Valuation of trading stock (including dealer’s livestock)) when trading stock is transferred on a settlement of relationship property.

  2. If the transferor used trading stock in carrying on a business and held the trading stock at the start of the year of transfer, the transfer is treated as a disposal by the transferor and an acquisition by the transferee for an amount equal to the greater of—

  3. the value of the trading stock under section EB 3 (Valuation of trading stock) for the transferor at the end of the income year before the year of transfer; or
    1. the value of the trading stock under section EB 3 for the transferee at the end of the year of transfer.

      1. If the transferor used the trading stock in carrying on a business and acquired the trading stock during the year of transfer, the transfer is treated as a disposal by the transferor and an acquisition by the transferee for an amount equal to the cost of the trading stock to the transferor.

      2. If the transferor did not use the trading stock in the carrying on of a business, the transfer is treated as a disposal by the transferor and acquisition by the transferee for an amount equal to the cost of the trading stock to the transferor.

      3. If, after a transfer under subsection (2) or (3), the trading stock was not used by the transferee in the carrying on of a business and they dispose of the trading stock at any time, the disposal is treated as a disposal of trading stock used by the transferee in the carrying on of a business.

      4. For the purposes of subsection (2), trading stock does not include specified livestock unless it is used in a dealing operation and sections FB 14 and FB 17 apply.

      5. This section overrides sections GC 1 and GC 2 (which relate to the disposal of trading stock for inadequate consideration).

      Compare
      Notes
      • Section FB 13 list of defined terms dispose: inserted, on , by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).