Income Tax Act 2007

Recharacterisation of certain transactions - Distribution, transmission, and gifts of property

FC 3: Property transferred to spouse, civil union partner, or de facto partner

You could also call this:

"What happens to property when someone dies and leaves it to their partner"

When someone dies, their property might be transferred to their spouse, civil union partner, or de facto partner. This happens when the circumstances are described in section FC 1(1)(a) or (b). However, this does not apply if the property is tax-base property and someone else is entitled to other tax-base property. The transfer of property to the surviving partner is treated as a transfer of relationship property under subpart FB. This includes any transfer to an executor or administrator. Section FC 9 has different rules for certain transfers of residential land. You should look at the rules to see how they apply to your situation. The rules can be complex, so it is a good idea to understand them clearly. The law has specific rules for different types of property and relationships.

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FC 2: Transfer at market value, or

"Transferring property is like selling it at its market value on the transaction date."

FC 4: Property transferred to charities or to close relatives and others, or

"What happens to property when someone dies and it's given to charities or family members"

Part FRecharacterisation of certain transactions
Distribution, transmission, and gifts of property

FC 3Property transferred to spouse, civil union partner, or de facto partner

This section applies in the circumstances described in section FC 1(1)(a) or (b) when property is transferred on a person’s death to the surviving spouse, civil union partner, or de facto partner of the deceased person. However, this section does not apply if—
the property is tax-base property; and
a person who is not a close relative of the deceased person is beneficially entitled under the will or intestacy to other property that is tax-base property.

The transfer of property to the surviving spouse, civil union partner, or de facto partner of the deceased person, including any intervening transfer to an executor or administrator, is treated as a transfer of property under a settlement of relationship property under subpart FB (Transfers of relationship property).
Section FC 9 overrides this section for certain transfers of residential land.

Compare

2004 No 35 s FI 4

Notes

Section FC 3(3) heading: inserted (with effect on 1 October 2015 and applying to a person’s disposal of residential land if the date that the person first acquires an estate or interest in the residential land is on or after that date), on 16 November 2015, by section 13(1) of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).
Section FC 3(3): inserted (with effect on 1 October 2015 and applying to a person’s disposal of residential land if the date that the person first acquires an estate or interest in the residential land is on or after that date), on 16 November 2015, by section 13(1) of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).
Section FC 3 list of defined terms property: inserted, on 24 February 2016, by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
Section FC 3 list of defined terms residential land: inserted (with effect on 1 October 2015), on 16 November 2015, by section 13(2) of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).