Private ruling: CGT - legal vs beneficial ownership
Date of advice: 3 July 2023
Published: 28 August 2023
Ruling period: Year ended 30 June 2022
Date scheme commenced: 1 July 2021

Ruling: Q1: Did you have a capital gains tax (CGT) event when your XX% interest in the property was sold? | A1: No. Based on the facts, the Commissioner accepts that in your circumstances, although you and your child were the legal owners of the property, it was never intended that you would have any beneficial ownership. The sale of the property has triggered a CGT A1 event. It can be reasonably concluded that you did not have beneficial ownership of the property. Consequently, the CGT event A1 did not happen to you when your XX% interest of the property was sold.

Relevant facts and circumstances: You reside at your own residence. When the property was for sale back in 19XX, you suggested your child could purchase the property. Your child could not satisfy the requirements for a loan at that time, so you assisted your child to obtain the mortgage. To satisfy the banking regulations, you became a signatory and debtor to the amount equal to YY% of the mortgage and the agreed payment from you was that percentage of the regular payment. The title certificate showing that you and your child were registered as tenants in common, with you holding XX% and your child holding ZZ%. Your child provided the deposit. You did not provide any money towards the purchase. You made payments for the first several months from settlement date. It was never your intention to have your child repay any of payments. Other than the payments for that period, you did not make any other payments. Your child paid to add an extension to the property. Your child lived in that property and then the ex-spouse and children lived in that property until divorce finalised. You have never lived in the property. You have never paid any utilities, rates, or insurance. The property was sold. The sale proceeds went to your child.

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