Private ruling: Capital gains tax
Date of advice: 23 February 2024
Published: 8 April 2024
Ruling period: Year ended 30 June 2022
Date scheme commenced: 1 July 2021

Ruling: Q1: Does any capital gains arise when you transfer full legal title of a property to your child and their partner? | A1: No. The Commissioner is satisfied that based on the information provided that a capital gains tax event relevant to you did not occur, as you were not the beneficial owner of the property. It is possible for legal ownership to differ from beneficial ownership. Where beneficial ownership and legal ownership of an asset are not the same, there must be evidence that the legal owner holds the property on trust for the beneficial owner. The Commissioner is satisfied that you did not have a beneficial ownership in the property.

Relevant facts and circumstances: Your child needed assistance purchasing land and building a home. The land settled several years ago. The home was completed later in the same year it was settled. Your child and their family moved into the house as their main residence. Your name was placed on the mortgage as per the bank requirements and you lent your child an amount of money as savings to be able to secure the loan. You have a written agreement with your child and their partner regarding the money loaned to them. Your child paid you back a smaller of the amount of the total that was lent to them after their legal/council costs were considered. This amount was deposited into your bank account in a prior year. You were removed from the title of the property on the same day as the money was deposited in the bank. Your child sold the property a few months after you were removed from the property title. You did not receive any of the proceeds from the sale. You did not pay or contribute to the repayment of the loan and you did not pay or contribute to the running expenses of the property.

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