Private ruling: Capital gains tax - legal and beneficial ownership
Date of advice: 13 December 2021
Published: March 2022
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Did Individual A have a beneficial ownership interest in the property from the date of purchase until the legal ownership was transferred to them? | A1: Yes. The Commissioner accepts that Individual A held an interest in the property as the beneficial owner from the time of purchase until the correction of the legal title. Therefore, the capital gains tax (CGT) provisions applied to Individual A and not the other individuals from the date of purchase. | Q2: Did CGT event A1, or another CGT event, happen when the other individuals were removed from the title of the property? | A2: No. The Commissioner is satisfied that Individual A held the beneficial ownership interest in the property from the date of purchase, meaning that the CGT provisions applied to Individual A and not the other individuals from the date of purchase.

Relevant facts and circumstances: Individual A arranged for the purchase of a property for development purposes. The funds required for the purchase and all the costs associated with the purchase were contributed by Individual A. Individual A sent a copy of the sale/purchase contract to their solicitor showing the purchasers names as Individual A and Entity X. Individual A's solicitor subsequently arranged for the sale/purchase contract to be changed to substitute Individual A's name for the names of the other individuals. Individual A was only informed of the change just prior to settlement and was told it could only be changed after settlement. The other individuals did not give their permission to be included as purchasers on the title. Individual A subsequently contacted their solicitor many times to see what could be done about a reversal, however, no progress was made. Individual A subsequently arranged for a transfer of title from the names of the other individuals to them and paid the required stamp duty. The property was sold several years later and Individual A and Entity X as joint owners were liable for capital gains tax on the sale.

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 109-5