Private ruling: Capital Gains Tax: shares: in-specie transfer: legal/beneficial ownership
Published: September 2017
Ruling period: Income year ending 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Did a capital gains tax event occur when the shares were transferred in-specie into your investment account? | A1: No.

Relevant facts and circumstances: You own various shares in numerous companies which were acquired on various dates. After 20 September 1985, you transferred numerous shares you owned into an investment account held by Company A. Company A is a wealth management company and its investment account enables investors to tailor their investments. Investors transferring their shares using in-specie transfers into the investment account do not lose their beneficial ownership in the shares. You lodged your 2015-16 income tax return and did not include any capital gain amount in relation to the transfer of the shares into Company A's investment account.

Relevant legislative provisions: Income Tax Assessment Act 1997 Part 3-1 | Income Tax Assessment Act 1997 Part 3-3

Reasons for decision: Summary: A capital gain or capital loss may arise if a capital gains tax (CGT) event happens to a CGT asset. Under Section 108-5 of the Income Tax Assessment Act1997 (ITAA 1997), a CGT asset is any kind of property, or a legal or equitable right that is not property. The CGT provisions apply when you dispose of an asset acquired on or after 20 September 1985. However, subsection 104-10(2) of the ITAA 1997 states that a change in the legal ownership of an asset without a change in the beneficial ownership will not constitute a disposal for CGT purposes. A beneficial owner is the person or entity who is beneficially entitled to the income and proceeds from the asset. In your situation you transferred various shares you owned via an in-specie transfer into the Account that you held with Company A. We accept that you have maintained the beneficial ownership of the shares when they were transferred in-specie as you would be entitled to any capital proceeds if you sold the shares. As neither the legal or beneficial ownership in the shares did not change when they were transferred into the Account, it has been determined that that there will be no CGT implications. Section 104-10 of the ITAA 1997 does not apply and no CGT event has occurred.