Private ruling: Beneficial ownership
Date of advice: 14 July 2022
Published: October 2022
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the sale of the property result in a capital gains tax (CGT) event for you? | A1: No. Having considered your circumstances and the relevant factors relating to your situation, the Commissioner accepts that although you were the legal owner of the property, it was never intended for you to have any beneficial ownership of the property. Therefore, you will not have a CGT event A1 or any other CGT event occurring when your legal ownership ends.

Relevant facts and circumstances: In XXXX your relatives attempted to purchase a property. Due to their age and medical conditions, the financial institution declined to lend the funds to purchase the property. It was suggested by the financial institution that you add your name to the application to increase the likelihood the loan application would be approved. Their application was again declined. The financial institution advised you that you would be able to borrow the funds to secure the property in your name solely. To obtain the property for them, you proceeded with the loan application and secured the property for them in your name. You became the legal owner of the property. At the time of purchase, your conveyancer wrote an agreement between you and your relatives stating that you purchased the property on behalf of your relatives and that your relatives would pay all expenses associated with the property. Your relatives transferred the funds for the mortgage payments into your bank account where the mortgage payments would come from. You have not declared rental income or claimed deductions in connection with the property on your income tax returns. In XXXX your relative sought to sell the property. As you are the legal owner and mortgage holder, you arranged for the property to be listed for sale. The property sold. You paid the mortgage held on the property and currently hold the proceeds from the sale in your bank account whilst your relative lives with you and is searching for a suitable replacement property closer to you due to their age.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 section 104-5 | Income Tax Assessment Act 1997 section 104-10