Private ruling: CGT - beneficial ownership
Date of advice: 17 April 2026
Published: 13 July 2026
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Did Capital Gains Tax (CGT) event A1 happen to you when you transferred your share in the Property to your child and their spouse ? | A1: Yes.

Relevant facts and circumstances: In 20XX, your child and their spouse asked you to be Guarantor as they were unable to service their proposed loan. A loan worksheet prepared before the loan include the following details: Purpose - You, your child and their spouse wish to purchase an owner occupied property. You are assisting them by being a co-borrower. Income - Your child's spouse's and your employment and income details. Assets and Liabilities - your child and their spouse's (combined), and your assets and liabilities including X properties, major expenses, and disposable income. Product requirements - Guarantor Allowed is unticked. A loan checklist includes your child's and their spouse's required documents and personal details. In 20XX, the title to the Property transferred to you, your child and their spouse. Loan 1 In 20XX, the bank approved the loan application. The bank letter included the following details: Loan offer made to - you, your child and their spouse. Security - Registered mortgage over your investment property and the Property. In 20XX, the purchase of the Property settled. Loan 2 In 20XX, your child and their spouse applied to refinance with a bank. A loan summary included the following details: Applicants - your child and their spouse Assets and liabilities of your child and their spouse Security details - Proposed owners - your child and their spouse - Property address - the Property. Declaration - signed by your child and their spouse in 20XX. Loan Discharge In 20XX, your child and their spouse commenced refinancing their loan with a bank. The Loan 1 bank discharge form included the following details: Discharge type - Refinance a property Excess funds, Finance institution: a bank Security details: Security 1 - The Property, security option, refinance property Security 2 - Your investment property, release without settlement Releasing securities without settlement - your investment property. Full name of person to receive deeds/documents - you Refinance details: Finance company Borrowers - your child and their spouse Guarantor - you In 20XX, you applied to be a Guarantor of Loan 2. The Guarantor form included the following details: Guarantor 1 - you Assets and liabilities, included security property details - your investment property Loan 3 In 20XX, your child and their spouse applied to increase the loan and remove you from the loan. The bank form included the following details: The purpose of our loan is to - House renovations Option 1 - Increase my borrowings Remove or change Borrower/Guarantor- you In 20XX, your child and their spouse commenced refinancing the loan with a bank. The bank letter addressed to them enclosed loan documents for consideration and acceptance. Property title The Property's title is identified as Lot XXX on RP XXXXXX in XXX in XXX, Title Reference XXXXXXXX. The land registry provided the following details: Mortgagee: Bank Mortgagor: You, your child and their spouse. In 20XX, a bank issued a discharge request to the Borrower/Guarantors, your child and their spouse, and you. The reason for the discharge was 'paying out your loan using your own funds'. In 20XX, you were removed from the Property title.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 Division 115 | Income Tax Assessment Act 1997 Part 3-1 | Income Tax Assessment Act 1997 Part 3-3

Reasons for decision: Summary: Capital gains tax (CGT) event A1 happened to you when you transferred your 1/3 share in the property to your child and their spouse. | Detailed Reasoning - Capital Gains Tax: Section 102-20 of the ITAA 1997 provides that a capital gain or capital loss results from a CGT event occurring. The most common CGT event, event A1, occurs under section 104-10 of the ITAA 1997 when there is a change in ownership of a CGT asset. Subsection 104-10(2) of the ITAA 1997 provides that a disposal of a CGT asset does not occur if there is only a change of legal ownership and no change of beneficial ownership. We recognise that you can be a legal owner of a property but have no beneficial ownership. In these circumstances, it is the individual who has beneficial ownership of a property who is subject to a CGT event upon sale or transfer of title. | Detailed Reasoning - Legal and equitable ownership: TR 93/32 Income tax: rental property - division of net income or loss between co-owners broadly deals with the division of rental income or loss between co-owners. It also outlines our approach to considering differences between legal and equitable ownership. Paragraph 41 of TR 93/32 provides there are extremely limited [emphasis added] circumstances where the legal and equitable interests are not the same and that there is sufficient evidence to establish that the equitable interest is different from the legal title. Paragraph 42 of TR 93/32 provides that capital gains or losses are divided on the same basis as net income or loss where there is a difference between legal and equitable ownership. Your legal interest in a property is determined by the legal title to that property under the property law legislation in the State or Territory in which the property is situated. In some cases, it is possible for legal ownership to differ from equitable ownership, also known as 'beneficial' ownership. You may hold a legal ownership interest in a property for another individual on trust. As such, we require the same standard of evidence to establish that the beneficial ownership is different to the legal title in any relevant property dealings or transactions. This evidence ordinarily includes: contemporaneous documentation that clearly shows the parties' intentions at the time the property was purchased, and documentation that clearly shows that the parties treated the property in accordance with those intentions during the ownership period. Gibbs CJ in Muschinski v. Dodds [1985] HCA 78 ( Muschinski ) explained the relevance of contemporaneous evidence required to establish a trust over property between two parties: Where both transferees have contributed to the purchase money, the intentions of both are material, but where only one has provided the money it is his or her intention alone that has to be ascertained. The evidence admissible to establish the intention of the real purchaser will comprise 'the acts and declarations of the parties before or at the time of the purchase... or so immediately thereafter as to constitute a part of the transaction' ( Charles Marshall Pty. Ltd. v. Grimsley [1956] HCA 28; (1956) 95 CLR 353, at p 365). As considered by Gageler J in Bosanac v Commissioner of Taxation (2022) 275 CLR 37 ( Bosanac ) at [64]: The presumption of a resulting trust is a presumption of fact, functionally akin to a civil onus of proof. The presumption will yield to an actual intention to the contrary found on the balance of probabilities as an inference drawn from the totality of the evidence. The weight to be given to the fact of a contribution having been made to the purchase price in drawing an inference as to actual intention will vary according to the totality of the circumstances of the case. Further, as stated by Gordan and Edelman JJ in Bosanac at [113] in: ... The objective intention of the parties is determined at the time when the trust was purportedly created - here, when the property in issue was purchased. Apart from admissions against interest, the only evidence relevant and admissible as to the parties' objective intention is their acts and declarations before or at the time of the transaction or "so immediately [thereafter] as to constitute a part of the transaction". Subsequent events and conduct are otherwise not admissible. Where it is asserted that the equitable ownership and legal ownership of a property are not the same, there must be evidence to show that the legal owner holds the property in trust for the beneficial owner. Relevant evidence includes contemporaneous information that demonstrates the intentions of the parties at the time the property was purchased or transferred from one legal owner to another, and evidence of contributions made by the parties towards the purchase price. | Detailed Reasoning - Express trust: An express trust is one intentionally created by the owner of property in order to confer a benefit upon another. It is created by express declaration, which can be by some agreement or common intention held by the parties to the trust. For an express trust to be created it is necessary that there is certainty of the intention to create a trust, subject matter and the object of the trust. While trusts can be created orally, all State Property Law Acts contain provisions that preclude the creation or transfer of interests in land except if evidenced in writing. | Detailed Reasoning - Resulting trusts: On the purchase of real property, a resulting trust may arise where the legal title that vests in one or more of the parties does not reflect the respective contributions of the parties to the purchase price. A resulting trust arises by operation of law and falls into two broad categories. One such category is where someone purchases property in the name of another ( Calverley v Green 56 ALR 483). A trust is presumed in favour of the party providing the purchase money. As stated in Calverley by Gibbs CJ: Where one person alone has provided the purchase money it is her or his intention alone that has to be ascertained. In the present case however both purchasers contributed the purchase money. The amount... was provided equally by the parties, for it was lent to them jointly, on terms which made them jointly and severally liable for its repayment, and, having thus been borrowed, was applied by them in part payment of the purchase price. Mason and Brennan JJ further expanded on the purchase price later in Calverley saying: The purchase price is what is paid in order to acquire the property; the mortgage instalments are paid to the lender from whom the money to pay some or all of the purchase price is borrowed. In this case, the [money] was borrowed from the mortgagee by the plaintiff and defendant jointly... Thus the plaintiff and defendant both contributed to the purchase price of the... property. If a resulting trust arises, and you hold the legal title, you are presumed to hold the property upon resulting trust in favour of those who contributed to its purchase cost. The law presumes that the purchaser, as the person providing consideration for the purchase intended to retain the beneficial interest, although the legal interest is in the other's name. The presumption of a resulting trust can be rebutted by evidence of the parties' intentions at the time of purchase. | Detailed Reasoning - Application to your circumstances: Our starting point is that legal and equitable interests are the same unless there is sufficient evidence to demonstrate that the equitable interest varies from the legal interest. In your case, the evidence you have provided from the time of purchase demonstrates that you contributed to the purchase of the Property by being a co-borrower on the loan documents. As such, you owned a share in the Property. You were also registered as an owner on the Property title. Therefore, we consider that your legal and beneficial interests are the same unless you can establish that the equitable interest is different from the legal title. We are guided by the common law principles to consider actions and evidence from before, at the time, and immediately after the purchase in accordance with the authorities in Muschinski and Bosanac . The Loan 1 documents describe you as a co-borrower on the loan. Further, your employment, income, and assets (including your investment property) were used to assess the loan security and serviceability. As in Calverley , you were a co-borrower jointly responsible for the loan repayments along with your child and their spouse, and had equal rights to the property/funds. As such, we consider that even if you did not contribute to the purchase price through any cash amounts, you did contribute to the purchase price via the loan. Although your intention was to be guarantor on Loan 1, this is not what actually happened. Your child and their spouse were unable to obtain the loan without your assistance to meet the bank's requirements. Although intention is a key part of identifying legal and beneficial interest, it must also be viewed through the actions you undertook. In your case, the default presumption is a resulting trust which effectively leaves you in the same position as the legal title. A resulting trust means your equitable interest in the Property was equivalent to your proportional contribution to the purchase price. As a co-borrower on the Loan 1, you contributed to the purchase price. Therefore, your equitable interest under the resulting trust rules is also equal to your legal interest. Therefore, CGT event A1 happened to you when you transferred your share in the Property to your child and their spouse . You may be entitled to a 50% CGT discount under section Division 115 of the ITAA 1997 as you held your share of the Property longer than 12 months, provided you meet the relevant criteria.