Private ruling: CGT - legal v beneficial ownership
Date of advice: 12 December 2023
Published: 5 February 2024
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the transfer of your ownership interest in 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 had a legal ownership interest in the property, it was never intended for you to have any beneficial ownership of the property. Therefore, CGT event A1 or any other CGT event will not happen when your legal ownership ends.

Relevant facts and circumstances: At some time after 1985, you acquired the property. Your sibling and their spouse paid the total purchase price from their personal savings. They also paid the transfer/stamp duty. You made no contribution to the acquisition costs. Legal title is held solely in your name. The property was put in your name to quarantine the commercial risk from holding the property while your sibling and their spouse conducted their business. All parties understood that the beneficial interest in the property belonged to your sibling and their spouse. Your sibling and their spouse have resided in the dwelling on the property and used it as their principal place of residence since it was acquired. You have never resided at the property. Your sibling and their spouse have substantially renovated the property and paid all associated costs. Your sibling and their spouse have paid the rates and insurance for the property. You made a small contribution towards the cost of installing equipment on the property but have paid no other costs or expenses. You provided a signed declaration confirming the above information. Your Will provides that you give the property to your sibling and their spouse as joint tenants. Your sibling and their spouse have Wills that evidence they both resided at the property when their wills were written. There is no mention of the property as being an asset in either will. You now intend transferring legal ownership of the property to XXX and XXX during the ruling period.

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 106-50 | Income Tax assessment Act 1997 section 108-5