Private ruling: CGT - disposal of a dwelling - beneficial ownership
Date of advice: 1 June 2022
Published: August 2022
Ruling period: The income year ended 30 June YYYY
Date scheme commenced: 1 July YYYY

Ruling: Q1: Did a capital gains tax (CGT) event happen to you on the sale of the property? | A1: No. CGT event A1 occurs when there is a disposal of an ownership interest in a CGT asset. However, CGT event A1 does not occur if there is only a change of legal ownership for you and not a change of beneficial ownership. Based on the facts, the Commissioner accepts that in your circumstances, although your name was included on the title of the property, it was never intended for you to have, and you never had, any beneficial ownership of the property and it can be reasonably concluded that at time of change of ownership, that is, when the property was sold, you did not dispose of any beneficial ownership interest. Consequently, you did not have a CGT event A1 when the property was sold. It is also considered that no other CGT event happened to you.

Relevant facts and circumstances: Your adult child purchased the property in YYYY. The bank's approval of your child's mortgage for the purchase of the property was conditional upon you: • being named as joint tenant on the property title with your child, • being joint borrower on the mortgage with your child, and • guaranteeing the mortgage. You agreed to the bank's conditions listed above and as such you were a joint tenant on the property title and were also joint borrower and guarantor of the mortgage. All property-related costs, including the mortgage, were paid by your child. You had no financial input in the purchase, maintenance, upkeep, or any other costs related to the property. Your child lived in the property as their primary residence. You never lived in the property. The property was sold in YYYY. The proceeds from sale of the property were retained by your child. You did not receive any funds from the sale of the property.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 section 104-10