Private ruling: Capital gains tax
Date of advice: 23 November 2016
Published: April 2017
Ruling period: Year ended 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Did you have an ownership interest in the property for capital gains tax (CGT) purposes? | A1: No.

Relevant facts and circumstances: Your parents purchased a post-CGT property to be their main residence. It was agreed that your name would be placed on the title as your parents believed it would assist in the administration of your parents' deceased estates. The title was held in the names of your parents and you as joint tenants. Your parents paid the full amount of the purchase price for the property. You did not contribute any money towards the purchase price, nor pay any outgoings in relation to the property. There was no written agreement evidencing the arrangement. Your parents resided at the property until 20XX. The property was subsequently sold in 20YY. All sale proceeds were distributed to your parents.

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

Reasons for decision: Summary: When considering the disposal of your interest in the property, the most important element in the application of the CGT provisions is ownership. It must be determined who is the legal and/or beneficial owner of the property. Generally, the owner of the property is the person(s) registered on the title, but it is possible for legal ownership to differ from beneficial ownership. When a person purchases and pays for a property, but legal title is placed in another person's name, a resulting trust will arise in favour of the contributor of the purchase money. Where a property is purchased in the name of one person and another person makes a direct financial contribution to the purchase, the property is presumed to be held in shares proportionate to the contributions made by each of them. In your case, although the property was purchased in your name, your parents contributed the entire amount of the purchase price for the property. Therefore, you were not an owner for CGT purposes.