Private ruling: CGT - legal v beneficial ownership
Date of advice: 31 August 2021
Published: November 2021
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will you have a CGT event A1 arising from the sale of the property by the executor of your parent's estate? | A1: No.

Relevant facts and circumstances: A property was purchased in your name as your parents were unable to secure a loan for the purchase. Although you entered into the mortgage with the bank, you never made any repayments to the loan or contributed any way financially to the property. You never treated the property as an asset of yours, nor did you receive rent or claim any deductions for expenses associated with the property. You never lived at the property. You did not claim any first homeowners grant towards the purchase of this property. Your parents treated the property as their own and it was their main residence for the entire period of ownership. Your parents are now deceased with the properties being sold as part of the finalisation of the estates.

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

Reasons for decision: Summary: CGT event A1 occurs when there is a disposal of an ownership interest in a CGT asset. However, CGT event A1 does not occur if there is only a change of legal ownership and not a change of beneficial ownership. You agreed to be the registered legal owner of the property, but without any expectation of having any elements of beneficial ownership of the property. You were not going to live in the property. You were not intending to and did not incur any expenses of ownership of the property, including mortgage payments. You did not intend to or obtain rent in respect of your legal ownership and there was no intention for you to benefit from any future sale of the property. Based on the facts, the Commissioner accepts that in your circumstances, although you were a legal owner of the property, it was never intended for you to have any beneficial ownership of the property and it can be reasonably concluded that at time of change of legal ownership of the property, that is, when the property was sold, you will not have a CGT event A1 or any other CGT event occurring when your legal ownership ends.

This ruling applies for the following period: