Private ruling: CGT event A1 - transfer of property title
Date of advice: 15 July 2025
Published: 22 September 2025
Ruling period: 30 June 20XX to 30 June 20XX
Date scheme commenced: 20 July 20XX

Ruling: Q1: Will a CGT event A1 happen when you transfer your % ownership interest of the property title to person B? | A1: Yes

Relevant facts and circumstances: On XX XX 20XX you and person B signed the purchase contract for the property You provided $XX,XXX deposit for the purchase of the property You provided $XX,XXX towards the stamp duty Due to person B's age in 20XX, person B was unable to obtain a home loan, so you decided to help them out On XX XXX 20XX, you and person B took out 2 loans one variable and one fixed with the XXX Bank in the amount of $XXX,XXX for each loan The cost of the property was $XXX,XXX On XX XX 20XX you received the purchase settlement documents You both decided that each of you would pay a loan each • You chose to pay the variable home loan and • Person B paid for the fixed home loan As a part of the approval for the home loans, you were required by the bank to be put onto the property title, and you were to make regular repayments from your income You decided that person B would only need to repay the amount of the home loan amount that you paid with no interest at a later date You each repaid your selected home loan repayments from your individual bank accounts and not from a joint account From the date of purchase until XX 20XX, the property was used as an investment property Both you and person B claimed rental property income and expenses In XX 20XX Person B moved into the property, and this became their main residence In 20XX you wanted to purchase a new main residence for yourself and needed to apply for a new home loan You then decided to pay out the fixed rate loan and person B would then take over the repayments of the outstanding variable rate loan.

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

Reasons for decision: Summary: You are considered to be both the legal and beneficial owner of the property, and you will be required to pay capital gains when you transfer the property title to person B in accordance with section 102-20 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. Under Section 104-10 (2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that you dispose of a CGT asset when you either enter into a contract for its disposal, or where no contract exists, when the change of ownership occurs. Section 104-10 (4) of the ITAA 1997 explains when you will make a capital gain or capital loss from the disposal of your CGT asset. Section 118-130 of the ITAA 1997 states that for a dwelling that you acquire under contract, you have an ownership interest in it from the time when you obtain legal ownership of it until your legal ownership interest in the dwelling ends. When you sell or dispose of an asset If you disposed of your ownership interest assets during the year, such as property or shares, you need to work out your capital gain or loss for each asset. If you received no capital proceeds from a CGT event, you are taken to have received the market value of the CGT asset that is the subject of the event. The market value is worked out as at the time of the event. You are required to obtain a market valuation when transferring property or shares between related parties, such as family members. Legal and beneficial 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 beneficial 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 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. 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). 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. Presumption of advancement The presumption of advancement is an equitable principle where 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 and their children. In Commissioner of Taxation v Bosanac (No 7) the argument of a resulting trust versus the presumption of advancement was discussed at length. The court outlined the following principles: • Although it is referred to as a presumption of advancement, the dominant approach in Australia is that it is strictly not a presumption. • Rather it is a description of certain circumstances, being the existence of particular relationships, where the presumption of a resulting trust does not arise. • Generally, the court will look to the dealings, documents and communications at the time of the purchase to determine whether there was intention to retain a beneficial interest. However, evidence of the dealings between the parties after the time of purchase may be a relevant factor. | Detailed Reasoning - Application to your circumstances: Due to person B's age in 20XX, person B was not approved for a home loan, so to help person B out you agreed to apply for a home loan in both names. You took out 2 loans a total of $XXX,XXX one a variable home loan of $XXX,XXX and fixed rate home loan of $XXX,XXX, you contributed $XX,XXX to the deposit for the purchase of the property as well as $XX,XXX for the stamp duty. You paid for the variable home loan and person B the fixed rate home loan. Since the date of purchase of the property both you and person B used the property as an investment property until April - May 20XX, when person B moved into the property as their main residence. Whilst using the property as an investment you claimed the rental property income and expenses which resulted in your assessable income being reduced by the net rental losses from 20XX to 20XX. Your net rental losses each financial year reduced your taxable income by these amounts: • 20XX - $-X,XXX • 20XX - $-X,XXX • 20XX - $-X,XXX • 20XX - $-X,XXX You contributed to the expenses e.g. water rates, council rates, land tax of the property while it was an investment property and only ceased doing this once person B decided to occupy the property. You have stated that person B would pay you back for the loan you paid but no interest and so far, to date you have recorded receiving $XXX,XXX back from person B, this is much less than you have already contributed to the property purchase amount and interest on the loans. All the documents provided support that you had both a legal and beneficial ownership in the property from the purchase date. You claimed rental income and expense resulting in your assessable income from 20XX to 20XX being reduced by the reported rental net losses each year. You did not provide contemporaneous information outlining your intention at the time of purchase of the property, including the terms of any arrangement. Likewise, the change over time in how the property was used, and the payment of loans, do not provide conclusive evidence that the legal and beneficial interest were different. Any capital gain or loss you make from the removal of your name from the property title cannot be disregarded and must be included in your income tax return in the relevant income year. As the property was held for over 12 months, there is a CGT discount of 50%, which means that you pay tax on half of the net capital gain on that asset.

Reasons for decision: Issue - CGT on transfer of property title