Private ruling: Legal vs equitable ownership - main residence exemption
Date of advice: 5 November 2025
Published: 22 December 2025
Ruling period: XX June 20XX | XX June 20XX
Date scheme commenced: DD MM YY

Ruling: Q1: Will CGT event A1 occur for me when the property? | A1: No.

Relevant facts and circumstances: On DD MM YY a property was purchased in the name of Person B and Person C and their names appear on the title. You have resided at the property since the settlement. The full cost to purchase the property was $XX • Cost price $XX • Legal & reports $XX • Stamp duty $XX • Locks etc. $XX • $XX • Less vendors reg fee $XX You stated that you and Person A (now deceased) provided most of the funds required to meet the purchase price of the property, that no loan was required to purchase the property, and that it was purchased using the sale proceeds from a previous property and personal savings. However, you have not provided any evidence regarding the funds. Furthermore, you provided a statement from the conveyancer that states that the purchase price was provided by Person B and Person C Person B and Person C contributed with supplementary funds • Person B contributions to the purchase price of the property totalled $XX which included the stamp duty and First Homeowner's Grant. • Person C contributions to the purchase price of the property totalled $XX. You did not seek legal advice before purchasing the property in Person B and Person C names. You did not have a formal written agreement at the time of purchasing the property evidencing your intentions at that time. You stated that Person A decided to purchase the property in both Person B and Person C names so that you could provide them with legal ownership in their first Australian property. Person B claimed the First Homeowner's Grant. You and Person A moved into the property soon after settlement and you remain residing in the property. You and Person A paid for the upkeep of the property. The property has never been used to produce assessable income. You want to downsize to a smaller property.

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 118-130 | Income Tax Assessment Act 1997 section 118-110 | Income Tax Assessment Act 1997 section 118-125

Reasons for decision: Detailed Reasoning - Detailed reasoning: Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that you make a capital gain or loss as a result of a CGT event occurring to a CGT asset in which you have an ownership interest. For this reason, it is important to establish who is the owner of a CGT asset at the time a CGT event occurs. | Detailed Reasoning - Legal and equitable ownership: The ATO considers that there are extremely limited 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. A person's legal interest in a property is determined by the legal title to that property under the property law in the State or Territory in which the property is situated. 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 evidences 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. Taxation Ruling TR 93/32 Income tax: rental property - division of net income or loss between co-owners (TR 93/32) contains guidance on the issues involved where the equitable interest in a property may not follow the legal title. As stated in TR 93/32 paragraphs 38 to 41, it has been said that if the equitable interest does not follow the legal title, there is some basis for the profit/loss to be distributed on the equitable and not the legal basis. We will assume where taxpayers are related, e.g., husband and wife, that the equitable right is exactly the same as the legal title. | 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 affected 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 or implied trusts: On the purchase of real property, a resulting trust may be presumed 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. As noted by Gibbs CJ, in Calverley v Green [1984] HCA 81 :(Calverley v Green case). A trust is presumed in favour of the party providing the purchase money. If an individual purchases and then pays for a property, but legal title is transferred to another person at their direction, the presumption of a resulting trust arises - the property is held in trust for them. 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 others name. However, there are instances where this application may not apply, including: • where there is evidence of a specific intention to hold beneficial interest in the property for another person who contributed no amount, or a lesser amount, towards the purchase price. • where the presumption of advancement applies • where a court orders that property is held on trust (not relevant to your circumstances). | Detailed Reasoning - Presumption of advancement: The presumption of advancement is an equitable principle in which a person puts property in the name of another person with whom they have a close familial relationship. The presumption only applies to transfers and purchases made by people who stand in particular relationships, including parents from parents to their children. Under the presumption of advancement, the property is transferred with the intention of transferring both the beneficial interest in the property as well as the legal title. The parties hold their equitable interests in the property in the same proportions as their legal interests. Calverley v. Green outlines the following principles: • Where one person purchases property in the name of another, or in the name of himself and another jointly, it will be presumed that the first person did not intend the other to acquire a beneficial interest unless there is such a relationship between the persons as gives rise to a presumption of advancement. • The presumption of advancement may be rebutted by evidence of the actual intention of the purchaser at the time of purchase. If two persons have contributed to the purchase and the legal interest does not reflect the proportions of their contributions, the intentions of both parties at the time of purchase are important. • The onus of rebutting the presumption of advancement lies with the person who is considered as having gifted the property to another (usually the purchaser). Evidence is required that demonstrates that the purchaser did not intend the property to be a gift to the other party. In Australia, the case of in Bosanac v Commissioner of Taxation [2022] HCA 34 ( Bosanac ) sets precedent for the contemporary interpretation of the presumption in Australia. Their honours Kiefel CJ and Gleeson held that the principles underlying the presumption of advancement have continuing application, with an acknowledgement that the presumption may be seen as an absence of reason to presume that a [resulting] trust has arisen. Summarily, the principles contemplated in Bosanac confirm that where a husband or parent advances funds to purchase property in which the legal title is held in the name of the wife or child, it is presumed that the contribution of the advancer is intended to be for the benefit of the title holder. Furthermore, in the absence of evidence to the contrary, the presumption of advancement effectively rebuts the presumption of resulting trust, in which case the onus upon the advancer to provide evidence that a trust was in fact created in relation to their contribution to the purchase of the property. The decision in Koprivnjak v Koprivnjak [2023] NSWCA 2 ( Koprivnjak ) illustrates the application of the principles refined in Bosanac to the advancement of funds by a parent towards property in which legal title is held by their child. As well as confirming that the presumption of advancement will apply to rebut the presumption of resulting trust, Griffiths AJA expanded on the reasoning regarding the establishment of a resulting trust, stating that "[the advancing party] carrie[s] the onus of satisfying the Court on the balance of probabilities that: • [the advancing party] advanced money to the purchase price and costs of the property for the purpose of a resulting trust (emphasis added); and • [the advancing party] and [the legal title holder] had the common intention that [the legal title holder] would hold the property on trust for [the advancing party]. | Detailed Reasoning - Application to your circumstances: You have not provided documentation to show there was an intention, at the time of purchase, that the property would be held on trust for you and Person A. We note that there are facts inconsistent with an intention that you and Person A would hold 100% beneficial ownership in the property including Person B receiving the First Home Owner's Grant and the statement that Person A wished to provide Person B and Person C with legal ownership of their first property in Australia. The various state and federal first home buyers incentives have eligibility criteria and the amounts can't be used to purchase a property for another person in circumstances where the recipient would not hold an ownership interest in the property. While you may have treated the property as your main residence from the settlement date, you have not provided the Commissioner with sufficient evidence that the legal ownership and beneficial ownership interests are different. As you don't have an ownership interest CGT event A1 does not occur for you when the property is sold under section 104-10 of the ITAA 1997, and there is no CGT event to which the Main Residence exemption can apply. For completeness, we note that if you had provided evidence that you contributed to the purchase price such that a resulting trust could have arisen, the presumption of advancement would displace the presumption of resulting trust. As such, the component of the purchase price contributed by you would have been held to be advanced for Person B and Person C benefit and the equitable interest would remain in accordance with the legal title, as affirmed by the decisions in Bosanac.