Private ruling: Beneficial ownership
Date of advice: 23 October 2023
Published: 27 November 2023
Ruling period: Year ended DD MM 20YY
Date scheme commenced: DD MM 20YY

Ruling: Q1: Will Capital Gains Tax (CGT) event A1 happen to you on the sale of the property as per section 104-10 of the Income Tax Assessment Act 1997? | A1: No. You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership does not occur if you stop being the legal owner of the asset but continue to be its beneficial owner. Having considered your circumstances and the relevant factors relating to your situation, the Commissioner accepts that although you had a legal ownership interest in the property, you did not have any beneficial ownership of the property. Therefore, CGT event A1 did not happen when your legal ownership ended, which in your case was when the original administration error was amended by transfer of title to the correct owner for nil consideration.

Relevant facts and circumstances: In 2017, Person A made enquiries as to a property advertised for sale, located at XXX. The block had 2 Units situated on it, registered on strata plan number XXX, under folio X and folio XX. Unit X was registered under volume XXX folio X, and Unit XX under volume XXX folio XX. Person A, along with Person B and Person C made an offer on Unit XX, that was accepted, and a contract of sale was dated DD MM 20YY, with settlement occurring a few weeks later. On DD MM 20YY, the registered title for the unit, under volume XXX, folio XX, was transferred to Person A, Person B and Person C. During 20YY, the owner of the other unit on the block advised they had been made aware that, the two units had been registered to the incorrect folio numbers originally. On DD MM 20YY, the title under volume XXX folio XX, was transferred from Person A, Person B and Person C to the owner of Unit X. The original administration error was amended by transfer of title to correct owner for nil consideration.

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