Private ruling: CGT - legal vs equitable ownership
Date of advice: 29 January 2026
Published: 30 March 2026
Ruling period: Year ended 30 June 20XX
Date scheme commenced: DDMMYY

Ruling: Q1: Will you be required to pay CGT when you transfer your ownership interest in the property to another person? | A1: Yes

Relevant facts and circumstances: On DDMMYY you purchased a property You took out a loan to purchase the property To secure the loan you used your main residence at that time secure the loan You advise that the property was purchased for the sole use of Person B and Person C to use as their main residence It has been advised that Person B contributed $x (which has not bene substantiated) for the initial deposit and then needed to loan $x from you to pay for the stamp duty and conveyancing fees etc. Person B was unable to obtain a loan due to their age and lack of credit history Person B was not included in the loan application when it was applied for Person B was not added to the property title at the time of purchase You and Person B did not have any written agreements/arrangement at the time of the purchase You have claimed rental income and deductions for the property, in your income tax returns for numerous consecutive years. Person B has made payments into the loan account that covers the loan repayments Person B has paid for the upkeep and council taxes on the property

Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 118-130

Reasons for decision: Summary: Section 102-20 provides that you make a capital gain or loss as a result of a CGT event A1, occurring to a CGT asset in which you have an ownership interest. For this reason, it is important to establish who is the owner of a CGT asset at the time a CGT event occurs, although legal and beneficial ownership are generally identical, there are some situations this may differ | Detailed Reasoning - Legal and equitable ownership: The Commissioner's position, as stated in paragraphs 41 and 42 of TR 93/32 Income tax: rental property - division of net income or loss between co-owners (TR 93/32), is that there are extremely limited [emphasis added] circumstances where the legal and equitable interests are not the same, and that there is sufficient evidence to establish that the equitable interest is different from the legal title. Although TR 93/32 broadly deals with the division of rental income or loss between co-owners, it outlines the Commissioner's approach to considering whether legal and equitable ownership align. TR 93/32 states that capital gains or losses are divided on the same basis as net income or loss where there is a difference between legal and equitable ownership. As such, the Commissioner requires the same standard of evidence to establish that the beneficial ownership is different to the legal title in any relevant property dealings or transactions. A person's legal interest in a property is determined by the legal title to that property under the property law in the State or Territory in which the property is situated. Where it is asserted that the equitable ownership and legal ownership of a property are not the same, there must be evidence to show that the legal owner holds the property in trust for the beneficial owner. Relevant evidence includes contemporaneous information that evidences the intentions of the parties at the time the property was purchased or transferred from one legal owner to another, and evidence of contributions made by the parties towards the purchase price. | Detailed Reasoning - Express trust: An express trust is one intentionally created by the owner of property in order to confer a benefit upon another. It is created by express declaration, which can be affected by some agreement or common intention held by the parties to the trust. For an express trust to be created it is necessary that there is certainty of the intention to create a trust, subject matter and the object of the trust. While trusts can be created orally, all State Property Law Acts contain provisions that preclude the creation or transfer of interests in land except if evidenced in writing. | Detailed Reasoning - Resulting or implied trusts: On the purchase of real property, a resulting trust may be presumed where the legal title that vests in one or more of the parties does not reflect the respective contributions of the parties to the purchase price. A resulting trust arises by operation of law and falls into two broad categories. One such category is where someone purchases property in the name of another. As noted by Gibbs CJ, in Calverley v Green [1984] ( Calverley v Green ). A trust is presumed in favour of the party providing the purchase money. If an individual purchases and then pays for a property, but legal title is transferred to another person at their direction, the presumption of a resulting trust arises - the property is held in trust for them. The law presumes that the purchaser, as the person providing consideration for the purchase intended to retain the beneficial interest, although the legal interest is in the others name. Mortgage Repayments Calverley v Green also confirms that mortgage repayments are not a component of the purchase price of a property. Mason and Brennan JJ state at paragraph 7: It is understandable but erroneous to regard the payment of mortgage instalments as payment of the purchase price of a home. The purchase price is what is paid in order to acquire the property; the mortgage instalments are paid to the lender from whom the money to pay some or all of the purchase price is borrowed. As this statement confirms, the purchase price of a property comprises the sum total of the amount paid from the purchaser/s to the vendor/s of a property in satisfaction of the contract of sale. Therefore, it is the ownership of the funds at the time the property is purchased which may cause a resulting trust to arise, and repayment of mortgage instalments are more correctly viewed as amounts which are owed to the mortgagee. However, there are instances where this application may not apply, including: • where there is evidence of a specific intention to hold beneficial interest in the property for another person who contributed no amount, or a lesser amount, towards the purchase price. • where the presumption of advancement applies (not relevant to your circumstances as you, not your child, are the legal owner of the property) • where a court orders that property is held on trust (not relevant to your circumstances). On DDMMYY you took out a X line of credit loan to purchase the property costing $X. You have advised that the property was purchased for the sole use of Person B and that Person B was unable to obtain a home loan due to their age and lack of credit rating You used your main residence at the time as collateral to secure the loan and when the property was transferred to you as sole owner You advised that Person B paid the initial deposit of $x, however you have not been able to provide documentation that supports this. You advised that Person B needed to obtain a personal loan from you in the amount of $x to pay the stamp duty, conveyancing fees etc, however you were also unable to provide documentation to show this. Documentation provided to support that the property was purchased for Person B is inconclusive. There is no evidence of an intention at the time of purchase that Person B would be the sole equitable/beneficial owner of the property and is insufficient to demonstrate that an express trust was created Furthermore, you did not have any form of written agreement/arrangement drawn up prior to or at the time of purchasing the property to show that you would be holding your ownership interest in the property on trust for Person B . There is insufficient evidence of a resulting trust. While the bank account statements show Person B deposited money into X loan account which is in your name only, the amounts deposited in this account for the repayments of a loan are not contributions to purchase price. Person B may have contributed $x towards a deposit on the purchase of the property but the use of your own property as collateral has more significance and you have not provided documentation to support that Person B made the initial deposit amount. These facts do not support that Person B had a sole beneficial ownership interest in the property when it was acquired. Although there is a parent-child relationship there is insufficient evidence of a resulting trust. Person B advised contribution to the purchase price is not substantiated, and this is not sufficient to trigger the presumption of advancement. We note that if there had been evidence of a resulting trust there would be a requirement to consider the facts and evidence provided and, in your circumstances, there is also no documented evidence that would rebut the presumption of advancement. The evidence provided does not indicate that a trust has been created to show that the property was purchased on trust for Person B. You have reported rental income and expenses in your income tax returns for numerous years. This information supports that you held both a legal and equitable/beneficial ownership interest in the property. As you have not provided the Commissioner with sufficient evidence that Person B had a sole equitable ownership of the property when it was acquired, CGT event A1 will occur for you on your disposal of your interest under section 104-10 of the ITAA 1997, with both legal and equitable interest having been held by yourself, at all times. Any capital gain or loss you make from the removal of your name from the property title cannot be disregarded and must be included in your income tax returns in the relevant income year. As the property was held for over 12 months, there is a CGT discount of 50%, which means that you pay tax on half of the net capital gain on that asset.