Private ruling: Legal and beneficial ownership
Date of advice: 21 July 2025
Published: 22 September 2025
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will you be required to pay CGT on the sale of the property | A1: Yes

Relevant facts and circumstances: Between 19XX & 19XX persons B & C decided to relocate from the family home which they owned in state 1 to state 2. In 19XX persons B & C discovered a property for sale in state 2 They retained ownership of the property in state 1, choosing not to sell this property to fund the purchase of the property in state 2 as at the time the move to state 2 was not certain to be a permanent move. Due to their advanced age in 19XX persons B & C asked if you would apply for a home loan to purchase the property in state 2, to which you consented. persons B & C were guarantors on the loan, and you believe that they used the property in state 1 as collateral to purchase the property in state 2, however you do not have documentation to confirm this. In May 19XX: • you signed a statement authorising persons B & C to act on your behalf to purchase the Property in state 2 for you • The property in state 2's, purchase price was $XXX,XXX, the total amount of your home loan was $XXX,XXX • The sales contract for the property in state 2 was provided with an attached deposit receipt for $X,XXX in the name of persons B & C acting on your behalf The total amount of your home loan was $XXX,XXXX In June 19XX: • settlement occurred and a letter from your solicitors was addressed to you confirming this • a letter from the Bank was addressed to persons B & C as they were acting on your behalf to advise settlement of the loan and how certain funds where to be disbursed In August 19XX a Caveat was taken out by persons B & C to advise that if you sell the Property in state 2 you would be required to reimburse persons B & C for any renovation/improvements/repairs they make to the property During the period of June 19XX until their respective deaths in 20XX & 20XX, persons B & C resided in the Property in state 2. You have stated that person's B & C made all the mortgage repayments in relation to the property. In 20XX: • person's B & C sold the property in state 1 (many years after moving into the property in state 2) • You recall that person's B & C applied the main residence exemption to the sale of the property, however, you have no documentation to support this. • You provided a signed and stamped statutory declaration executed at the Police Station in state 3 in July 20XX to advise that you request that your property (the property in state 2) be transferred to persons B & C for a sum of $XXX,XXX • You did not execute the transfer of the property in state 2 to person's B & C names • In 20XX your home loan for the Property in state 2 was paid and completed. In 20XX person B passed away. Person B's Will lists the address of the property in state 2 as their home address, however the will did not list an ownership interest in the property as one of their assets. No other information about the property in State 2 was in person B's Will. In 20XX person C passed away. Person C's Will lists the address of the property in state 2 as their home address, however the will did not list an ownership interest in the property in state b as one of their assets. No other information about this property was in person B's Will. You will sell the property in the 2026 or 2027 income years. Assumption You will sell the property in the near future possibly the 20XX or 20XX financial years.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 118-130

Reasons for decision: Summary: You are considered to be both the legal and beneficial owner of the property and will be required to pay capital gains when you sell the property in accordance with section 102-20 | Detailed Reasoning - Detailed reasoning: Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that you make a capital gain or loss as a result of a CGT event occurring to a CGT asset in which you have an ownership interest. For this reason, it is important to establish who is the owner of a CGT asset at the time a CGT event occurs. Under Section 104-10 (2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that you dispose of a CGT asset when you either enter into a contract for its disposal, or where no contract exists, when the change of ownership occurs. Section 104-10 (4) of the ITAA 1997 explains when you will make a capital gain or capital loss from the disposal of your CGT asset. Section 118-130 of the ITAA 1997 states that for a dwelling that you acquire under contract, you have an ownership interest in it from the time when you obtain legal ownership of it until your legal ownership interest in the dwelling ends. | Detailed Reasoning - When you sell or dispose of an asset: If you disposed of your ownership interest assets during the year, such as property or shares, you need to work out your capital gain or loss for each asset. If you received no capital proceeds from a CGT event, you are taken to have received the market value of the CGT asset that is the subject of the event. The market value is worked out as at the time of the event. You are required to obtain a market valuation when transferring property or shares between related parties, such as family members. | Detailed Reasoning - Legal and beneficial ownership: The ATO considers that there are extremely limited circumstances where the legal and equitable interests are not the same and that there is sufficient evidence to establish that the equitable interest is different from the legal title. A person's legal interest in a property is determined by the legal title to that property under the property law in the State or Territory in which the property is situated. Where it is asserted that the beneficial ownership and legal ownership of a property are not the same, there must be evidence to show that the legal owner holds the property in trust for the beneficial owner. Relevant evidence includes information that evidences the intentions of the parties at the time the property was purchased or transferred from one legal owner to another, and evidence of contributions made by the parties towards the purchase price. Taxation Ruling TR 93/32 Income tax: rental property - division of net income or loss between co-owners (TR 93/32) contains guidance on the issues involved where the equitable interest in a property may not follow the legal title. As stated in TR 93/32 paragraphs 38 to 41, It has been said that if the equitable interest does not follow the legal title, there is some basis for the profit/loss to be distributed on the equitable and not the legal basis. We will assume where taxpayers are related, e.g., husband and wife, that the equitable right is exactly the same as the legal title. | Detailed Reasoning - Resulting or implied trusts: On the purchase of real property, a resulting trust may be presumed where the legal title that vests in one or more of the parties does not reflect the respective contributions of the parties to the purchase price. A resulting trust arises by operation of law and falls into two broad categories. One such category is where someone purchases property in the name of another. As noted by Gibbs CJ, in Calverley v Green [1984] HCA 81 :(Calverley v Green case). A trust is presumed in favour of the party providing the purchase money. If an individual purchases and then pays for a property, but legal title is transferred to another person at their direction, the presumption of a resulting trust arises - the property is held in trust for them. The law presumes that the purchaser, as the person providing consideration for the purchase intended to retain the beneficial interest, although the legal interest is in the others name. However, there are instances where this application may not apply, including: • where there is evidence of a specific intention to hold beneficial interest in the property for another person who contributed no amount, or a lesser amount, towards the purchase price. • where the presumption of advancement applies • where a court orders that property is held on trust (not relevant to your circumstances). | Detailed Reasoning - Express trust: An express trust is one intentionally created by the owner of property in order to confer a benefit upon another. It is created by express declaration, which can be affected by some agreement or common intention held by the parties to the trust. For an express trust to be created it is necessary that there is certainty of the intention to create a trust, subject matter and the object of the trust. While trusts can be created orally, all State Property Law Acts contain provisions that preclude the creation or transfer of interests in land except if evidenced in writing. | Detailed Reasoning - Presumption of advancement: The presumption of advancement is an equitable principle where a person puts property in the name of another person with whom they have a close familial relationship. The presumption only applies to transfers and purchases made by people who stand in particular relationships, including parents and their children. In Commissioner of Taxation v Bosanac (No 7) the argument of a resulting trust versus the presumption of advancement was discussed at length. The court outlined the following principles: • Although it is referred to as a presumption of advancement, the dominant approach in Australia is that it is strictly not a presumption. • Rather it is a description of certain circumstances, being the existence of particular relationships, where the presumption of a resulting trust does not arise. • Generally, the court will look to the dealings, documents and communications at the time of the purchase to determine whether there was intention to retain a beneficial interest. However, evidence of the dealings between the parties after the time of purchase may be a relevant factor. Application to your circumstances As persons B and C were of an age where they were unable to obtain a home loan, and they were not willing to sell the family home they built to fund the purchase of a new home, they asked you to apply for a home loan in your name with them going guarantors and using the family home against the loan. You signed a statement giving person B & C the authority to act on your behalf in all matters concerning the new property You and persons B & C did not at any time sit down and write out the arrangement around the circumstances of the home loan and all matters in relation to the purchase of the new property, thus not creating a trust over the property to show that the property was beneficially purchased for persons B & C The documentation provided indicating contributions made by persons B & C to the property, including upkeep, is inconclusive. Some receipt shows that person's B & C paid for renovations and repairs, however this does not show an intention that persons B & C were the beneficial owners of the property only that they were residing in the property The Assurety document provided by yourself was created by person C also does not show persons B & C have a beneficial ownership in the property. A CGT event A1 will occur for you on your disposal of your interest under section 104-10 of the ITAA 1997, with both legal and beneficial interest having been held by yourself, at all times. Any capital gain or loss you make from the removal of your name from the property title cannot be disregarded and must be included in your income tax return in the relevant income year. As you did not live in the property and treat it as your main residence at any time during your ownership period you are not eligible to claim the main residence exemption. As the property was held for over 12 months, there is a CGT discount of 50%, which means that you pay tax on half of the net capital gain on that asset.