Private ruling: Capital gains tax - shares - ownership
Published: May 2015
Ruling period: Year ended 30 June 2015. | Year ended 30 June 2016.
Date scheme commenced: After 20 September 1985.

Ruling: Q1: Can your current X% legal ownership of shares be treated as 100% personal ownership for CGT purposes? | A1: No.

Relevant facts and circumstances: You and your ex-spouse were married, separated and then divorced. Sometime after 20 September 1985 you and your ex-spouse jointly purchased shares in a public offer at that time. When you and your ex-spouse separated an unsigned schedule of Assets and Liabilities was agreed between you and your ex-spouse on the split of assets. This agreement was a private agreement and not: • an order of a court or court order made by consent under the Family Law Act 1975 or a similar law of a foreign country; or • a court order under a state, territory or foreign law relating to de facto marriage breakdowns. Due to an oversight at the time, an off market transfer form to transfer your ex spouse's 50 % ownership interest in the shares (the transfer) was never lodged or completed. You state that you and your ex-spouse still agree that the transfer was intended to occur, and wish now to rectify the situation because you wish to sell the shares. You state that this will give rise to a sizable capital gain and that you wish to indemnify your ex-spouse from any taxation burden that may arise from the transfer and or sale. You seek this private ruling because you want to attribute ownership of your ex spouse's X% ownership interest in the shares from many years ago, so that all the CGT taxation is in your income tax return and not your ex spouse's. The following documents are to be read with and form part of the scheme for the purposes of this private binding ruling; • copy of the unsigned private agreement schedule regarding the proposed split of assets between you and your ex-spouse. • additional information contained in the document titled 'Tax Ruling request re Ownership of shares'

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 104-15 | Income Tax Assessment Act 1997 , Section 108-5 | Income Tax Assessment Act 1997 , Section 126-5

Reasons for decision: Summary: Your current X% legal ownership of shares cannot be treated as 100% personal ownership for CGT purposes. | Detailed Reasoning - Detailed reasoning: Currently you are a X% joint owner of the shares with your ex-spouse. CGT event B1 (use and enjoyment before title passes) has not happened because you have only been returning your half share of dividend income and franking credits in your income tax returns. This behaviour is in line with you being a X% owner. Additionally there was no agreement between you and your ex-spouse that you would have use and enjoyment of the shares before title passed. The only agreement that you had was a property settlement agreement. The CGT concessions available under Marriage Breakdown rollover do not apply because you and your ex-spouse divided your property under a private agreement. Additionally the shares were not transferred so no CGT event has happened. You can only make a capital gain or capital loss if and only if a CGT event happens. The Australian Taxation Office cannot remedy administrative oversights such as this and deem CGT events to have happened when they haven't. In your case you have a X% ownership in the shares. Your ex-spouse owns the other X% ownership interest.