Private ruling: Capital Gains Tax
Date of advice: 19 December 2017
Published: May 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Will the sale of the property result in a capital gains tax (CGT) event for you? | A1: No Under section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997), an entity will make a capital gain or a capital loss if a CGT event happens to a CGT asset. CGT event A1 occurs when a CGT asset is disposed of. An individual can be a legal owner but have no beneficial ownership in an asset. It is the beneficial owner that will have a CGT event upon sale of a CGT asset. In some cases, an entity may hold a legal ownership interest in property for another individual in trust. In your case, you have partial legal ownership in the property however were not the beneficial owner. Your relative was the beneficial owner of the property. You will not have CGT consequences as a result of the sale of the property. Further information on beneficial ownership can be found in Taxation Ruling IT 2486 and Taxation Determination TD 92/106.

Relevant facts and circumstances: A property was acquired after 20 September 1985 (the property). Your relative was not able to secure finance to purchase the property on their own and you assisted them by lending your name on the loan document. It was a requirement of the bank that the title deed for the property was put into joint names with yourself and your relative listed in equal shares. The loan for the property was approved by the bank. The property was the main residence of your relative since the date of acquisition and was not used to produce assessable income. You did not reside at the property. You did not contribute any portion of the purchase price or mortgage payments of the property and all outgoings and maintenance costs related to the property, for example council rates and water were paid by your relative. You held no beneficial interest in the property and the capacity on which that you were named on the title was as trustee for your relative who was the sole beneficial owner. The property was sold and a contract was signed in July 20XX and settlement occurred in August 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-20