Private ruling: Capital gains tax
Date of advice: 12 May 2026
Published: 27 July 2026
Ruling period: Year ended 30 June 20YY | Year ending 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Did a capital gains tax (CGT) event occur for the Trust when units were sold in the 20XX-XX financial year at the direction of the executer of an individual's deceased estate? | A1: No. | Q2: Did a CGT event occur for the Trust when a unit was sold in the 20YY-YY financial year at the direction of the executer of an individual's deceased estate? | A2: No. | Q3: Did a CGT event occur for the Trust when a unit was sold in the 20XX-XX financial under the instruction of the Bankruptcy Trustee? | A3: No.

Relevant facts and circumstances: A company is the Trustee of the Trust. The Trust was established in 19YY. The Trustee was placed into liquidation pursuant to winding up orders. The Trustee acquired the land prior to 19YY. The Trustee subsequently constructed a complex of units on the property. The units within the development were originally held as company titles prior to the introduction of strata titles. They were converted to strata titles when a strata plan was registered. In 20YY, the then directors of the Trustee resolved to distribute the units to beneficiaries of the Trust. Each beneficiary received units as evidenced by the resolution made at the time. Following this resolution, some units were transferred out of the Trustee's name. However, as at the date of liquidation a number of units remained registered in the Trustee's name. An individual is the beneficial owner of some units. They are an undischarged bankrupt and their interest in the units has vested in the trustee of their bankruptcy estate (Bankruptcy Trustee). The liquidator of the Trustee sold a unit in the 20YY-YY financial year under the instruction of the Bankruptcy Trustee. Another unit has been transferred to the Bankruptcy Trustee. Other units were beneficially owned by another individual at the time of their death and form part of their deceased estate. The liquidator of the Trustee sold units in the 20YY-YY financial year and in the 20YY-YY financial year at the direction of the executor of their deceased estate.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 120-20

Reasons for decision: Summary: Under section 120-20 of the Income Tax Assessment Act 1997 (ITAA 1997), an entity will make a capital gain or a capital loss if a capital gains tax (CGT) event happens to a CGT asset. CGT event A1 occurs when you dispose of a CGT asset. You are considered to have disposed of a CGT asset if a change of ownership occurs from you to another entity because of some act or event or by operation of law. The capital gain or capital loss is made at the time of the event (section 104-10 of the ITAA 1997). CGT event E7 happens if the trustee of a trust (except a unit trust or a trust to which Division 128 applies) disposes of a CGT asset of the trust to a beneficiary in satisfaction of the beneficiary's interest, or part of it, in the trust capital. The time of the event is when the disposal occurs. | Detailed Reasoning - Beneficial ownership: A beneficial owner is defined in Taxation Determination TD 2017/11 Income tax: who should be assessed to interest on bank accounts? A beneficial owner is the person or entity who is beneficially entitled to the income and proceeds from the asset. A legal owner is the individual who has their name on the legal documents associated with the capital gains tax (CGT) asset, an example would be the title deed for a property. An entity can be a legal owner but have no beneficial ownership in an asset. It is the beneficial owner of a CGT asset that is liable for capital gains tax upon sale of the assets. In some cases, an entity may hold a legal ownership interest in property for another individual in trust. | Detailed Reasoning - Application to your circumstances: In this case, a resolution was made in 20YY to distribute the units held by the Trustee to various beneficiaries. While the legal title to some units were transferred, the legal ownership of X units remained with the Trustee. However, the Commissioner accepts, based on the evidence available, that CGT event E7 occurred when the resolution was made resulting in a disposal by the Trustee. The beneficial ownership of the units, following the resolution, was held by the relevant individual beneficiaries. Therefore, when the Trustee transferred ownership of the units in the 20YY-YY and 20YY-YY financial year a CGT event did not occur for the Trustee.