Our tax system generally imposes tax consequences where property is transferred between persons related to one another (referred to in tax terminology as non-arm’s length parties) for any amount other than the fair market value of that property. However, different rules apply where property transfers take place as a result of marriage breakdown.
Generally, there are no immediate tax consequences where property is transferred from one spouse to another, as long as the parties are separated as a result of the breakdown of their marriage and the transfer is in settlement of property rights arising out of that marriage.
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