Private ruling: Trust - bare trust
Published: November 2011
Ruling period: 1 July 2011 to 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you absolutely entitled to the property of the trust as required under section 106-50 of the ITAA 1997? | A1: Yes. | Q2: Will CGT event A1 under section 104-10 of the ITAA 1997 apply when the property is transferred to you from the trust? | A2: No.

Relevant facts and circumstances: The trust purchased the property pursuant to a contract of sale dated after 20 September 1985. The initial deposit and balance of the purchase price was paid by you in your personal capacity. You are the only beneficiary of the trust. You paid all costs relating to and incidental to the transfer of the property. Since the acquisition of the property, you have paid all utility expenses relating to the property. You continue to pay all utility expenses. No other person has lived in the property. The property will be transferred to you for no consideration. You will continue to reside in the property.

Relevant legislative provisions: Income Tax Assessment Act 1997, Section 106-50 | Income Tax Assessment Act 1997, Section 104-10

Reasons for decision: Detailed Reasoning - Detailed reasoning: Section 106-50 of the ITAA 1997 states that if you are absolutely entitled to a CGT asset as against the trustee of a trust, any act done by the trustee in relation to the asset will apply to you as if you had done the act. In your case, the property was bought, maintained and improved with all the funds you provided to the trust. You can terminate the trust in respect of that asset by directing the trustee to transfer the asset to you as no other beneficiary has an interest in the asset. Therefore, you are absolutely entitled to the property as against the trustee of the trust. | Detailed Reasoning - Question 2: Will CGT event A1 under section 104-10 of the ITAA 1997 apply when the property is transferred to you from the trust? | Detailed Reasoning - Detailed reasoning: Section 104-10 of the ITAA 1997 states that CGT event A1 happens if you dispose of a CGT asset when a change of ownership occurs from you to another entity. However, a change of ownership does not occur if you continue to be its beneficial owner. In your case, you contributed all the funds to acquire, maintain and improve the property and had beneficial ownership of the property from the date of purchase. Therefore, you are not subject to CGT when the property is transferred to you from the trust as section 104-10 of the ITAA 1997 does not apply as a change of ownership did not occur.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.