Private ruling: CGT - beneficial ownership
Date of advice: 7 April 2026
Published: 29 June 2026
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Did spouse 1 hold beneficial ownership of the shares in the Company throughout the period when legal title was registered in spouse 2's name for the purposes of section 106-50 of the Income Tax Assessment Act 1997 [1] ? | A1: Yes. | Q2: Will CGT event A1 under section 104-10 occur when the share register is updated to record the spouse 1 as the registered owner? | A2: No.

Relevant facts and circumstances: Background Spouse 1 was a founder and sole director of the Company. The Company was incorporated in 20XX and funded by spouse 1 and several other founders. Spouse 1 provided 100% of the seed capital for the Company's establishment. Spouse 1 originally held their interest in the Company indirectly through another company, of which they are the sole shareholder. The Company derives its income from share trading based on the spouse 1's skills and professional expertise. The Company was established approximately X years before spouse 1 met spouse 2 and X years before they married in MMYYYY. Spouse 1 has worked as a professional share trader and has been involved in financial markets since YYYY. In YYYY, spouse 1 was an investment manager of an Entity with $X in investment assets, and the holder of Australian Financial Services Licence. Scrip for Scrip acquisition The Company preceded the establishment of the entity. The Company is a microcap investment company that follows a similar investment model to that of the Entity. Prior to the transaction, the Company held approximately $X in ASX listed companies (and other assets) and had X shareholders, X of whom also held shares in the Entity. Spouse 1 was a director and shareholder of the Entity and a shareholder and sole director of the Company. In MMYYYY, spouse 1 made a proposal to the other founders to acquire X ownership of the Company, and this proposal was accepted. The proposal was for the Entity to purchase the ASX listed assets from the Company via the issue of shares in the Entity. The Entity used its script to acquire the assets as it had limited cash resources at that time. The Entity agreed to purchase the ASX listed assets held as at the DDMMYYYY. The value of the assets were marked to the ASX market price at the completion date. Payment was made via an issue of new fully paid ordinary shares in the Entity to the other founders of the Company. The transaction was reviewed by an independent board. Share transfer between spouse 1 and spouse 2 Spouse 1 transferred various investment assets into spouse 2's name after their marriage as part of an asset-protection strategy due to risks associated with their work in the financial services industry. In MMYYYY, spouse 1 transferred the shares they held in the Company to spouse 2 for no consideration. This occurred X years after spouse 1 and spouse 2 met. In YYYY, another company owned and controlled by spouse 1 received a Notice of Claim and Letter of Demand from lawyers in relation to an investor loss. In an email dated DDMMYYYY between spouse 1 and a third party when discussing a proposed share swap spouse 1 stated, 'At this point I am the only shareholder and director of the Company...'. A copy of an historical company search was provided showing spouse 1 originally held an equity interest in the Company. Share transfer forms dated DDMMYYYY document the transfer of shares from the original founders of the Company to spouse 2, following the acceptance of the spouse 1's YYYY proposal. The transfer of shares from spouse 2 back to the spouse 1 for no consideration and without consultation with spouse 2 was dated DDMMYYYY on ASIC records. No valid transfer instrument was executed by spouse 2. Operation of the Company Spouse 1 controlled every aspect of the Company. They provided the capital, accessed company information, drove all the decision making including all strategic, operational and financial decisions. All the Company's activities were managed solely by spouse 1 including accounting, tax returns, and dividend decisions, including directing spouse 2 to pay the dividend to them. Spouse 1 gave directions concerning the Company's operations, finances and dividends, while spouse 2 acted in accordance with those directions. Spouse 1 was the lodger of official company documents relating to the Company and shareholding. An email from the spouse 1's former accountant confirms that all instructions concerning the Company's capital dividends and Division 7A matters were provided by spouse 1, and that they did not deal with spouse 2 regarding these matters. An email dated DDMMYYYY addressed solely to the spouse 1, advises them that a $X franked dividend had been paid to spouse 2 in the context of tax planning for the YYYY income year. Spouse 2 was not copied into the email and was only referred to in the third person. An email was sent from spouse 1 to spouse 2 dated DDMMYYYY directing them to transfer a dividend to the Company's bank account. There are records of money transfers from the Company's bank account to spouse 1 between MMYYYY and MMYYYY that show spouse 1 received regular payments of Company funds. Spouse 1 continued to manage the Company's affairs, execute compliance obligations and make strategic decisions following the YYYY transfer, without out any involvement of spouse 2. Spouse 1 consistently arranged for other valuable assets to be registered in spouse 2's name while retaining control and the beneficial interest themself. They initiated and directed the placement of bank investments into spouse 2's name, including the creation of bank term deposits held in their name. Spouse 1 made all of the decisions in relation to every aspect of the Company and shareholding as if they were the sole director and shareholder. Professional advisers and third parties conducted their dealings on all matters directly with spouse 1. Spouse 1 never discussed the operations or share ownership with spouse 2. The shares in the Company were treated consistently with other assets spouse 1 registered in spouse 2's name while maintaining decision-making control. Spouse 2's role and involvement Shares were registered in spouse 2's name for asset-protection purposes. There was a verbal understanding between the parties that spouse 1 remained the beneficial owner of the shares despite spouse 2 holding legal title. Spouse 2 made no financial contribution to the acquisition of shares or operation of the Company. Spouse 2 had no involvement in management, decision-making, business risk-taking or profit generation. Spouse 2 never exercised beneficial ownership rights such as voting, directing assets or participating in Company decisions, this was done by spouse 1. Spouse 2 did not access the Company's bank accounts. Spouse 2 never gave instructions to, or communicated with, the Company's accountants or other suppliers. Spouse 1 and spouse 2 did not discuss the Company's operations or ownership structure. Spouse 2 declared in a Statutory Declaration dated DDMMYYYY that it was their understanding that they held the shares for spouse 2's benefit and not for their own.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 106-50

Reasons for decision: Summary: Updating the share register to record spouse 1, as the legal owner, does not give rise to CGT event A1. The evidence demonstrates that spouse 2 held legal title only, under a trust arrangement for spouse 1, who remained the sole beneficial owner throughout the period of ownership. As spouse 2 did not at any time hold the beneficial interest in the shares, they are not taken to have disposed of a CGT asset under section 104-10 when the legal ownership was transferred. | Detailed Reasoning - Capital gains tax: Section 102-20 states that a capital gain or capital loss is made only if a capital gains tax (CGT) event happens to a CGT asset. All assets acquired since CGT started (20 September 1985) are subject to CGT unless specifically excluded. A share is a CGT asset under section 108-5. CGT event A1 happens under section 104-10 on a disposal where ownership changes. Subsection 104-10(2) states: You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership does not occur if you stop being the legal owner of the asset but continue to be its beneficial owner. | Detailed Reasoning - Legal and equitable ownership: Ordinarily, an asset is taken to be owned by the person who holds legal title. However, legal ownership will differ from equitable or 'beneficial' ownership where there is clear evidence that the legal owner in fact holds the asset on trust for another. To establish that legal and equitable ownership diverge, there must be evidence showing that the legal owner holds the asset for someone else. Relevant evidence includes contemporaneous material that demonstrates the parties' intentions at the time of purchase or transfer, as well as evidence of contributions made towards the purchase price. Where such circumstances exist, an individual may hold legal title to an asset on trust for another person. While equity recognises express, constructive and resulting trusts, only express and resulting trusts are relevant for present purposes. | 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. Trusts that are formed deliberately, or expressly, generally do not have to comply with any requirements as to form. This means they may be created orally. 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. | Detailed Reasoning - Resulting or implied trusts: A resulting trust may arise where the contributions to the purchase price of the asset are not proportionate to the legal interests in the asset. If an individual pays to acquire an asset, but legal title is transferred to another person at their direction, the presumption of a resulting trust arises as the asset 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 name of another individual. However, there are instances where this application may not apply. This is where the asset is transferred to the purchaser's immediate family, such as a spouse or a child. In such circumstances, the presumption of a resulting trust is replaced by the 'presumption of advancement'. The rebuttable presumption of advancement deems the purchaser to have been intended to advance the interests of the family members, such as by way of an absolute gift. | Detailed Reasoning - Presumption of advancement: A presumption of advancement is an equitable principle where a person puts an asset in the name of a spouse, child or other person. The presumption only applies to transfers and purchases made by people in particular relationships, such as parents and their children. The presumption of advancement operates to prevent a resulting trust from arising because the relationship between the relevant parties provides a reason against presuming a trust. The presumption operates on the hypothesis that, because a certain relationship exists between 2 parties, a benefit provided by one party to the other at the cost of the first was intended to be provided by way of advancement. The presumption of advancement may be rebutted by evidence of the actual intention of the purchaser at the time of purchase. Evidence is required to demonstrate that the purchaser did not intend the asset to be a gift to the other party by reason of their relationship. | Detailed Reasoning - Objective intention: To establish circumstances where legal and beneficial ownership do not align, there must be evidence sufficient to rebut the ordinary presumption that legal and equitable interests are the same. This evidence ordinarily consists of contemporaneous material demonstrating the parties' intentions at the time the asset was acquired and any documentation or conduct showing that the parties continued to treat the property consistently with those intentions throughout the period of ownership. The High Court has consistently underscored the importance of contemporaneous intention. As Gibbs CJ observed in Muschinski v. Dodds [1985] 160 CLR 583, HCA 78: that the relevant principles included there being contemporaneous evidence: Where both transferees have contributed to the purchase money, the intentions of both are material, but where only one has provided the money it is his or her intention alone that has to be ascertained. The evidence admissible to establish the intention of the real purchaser will comprise 'the acts and declarations of the parties before or at the time of the purchase... or so immediately thereafter as to constitute a part of the transaction' ( Charles Marshall Pty Ltd v Grimsley [1956] HCA 28; (1956) 95 CLR 353 at 365) Generally, the dealings, documents and communications at the time of the purchase will be examined to determine whether there was intention to retain a beneficial interest. In Bosanac v Commissioner of Taxation the High Court [2022] HCA 34 unanimously reaffirmed that the presumption of a resulting trust operates only as a weak and subordinate inference which applies only where the objective evidence does not reveal what the parties intended. Any objectively demonstrated intention whether for or against the creation of an equitable interest will always displace the presumption. Gordon and Edelman JJ at paragraph 108 went further, explaining that where the objective evidence itself reveals and intention to create an equitable interest, the presumption of resulting trust is displaced entirely, explaining: Where the objective facts based on evidence...tend to establish an objective intention that a provider of part of the purchase price would hold an equitable interest as to a particular proportion of a particular property, there will be an express trust which satisfies the three certainties of intention, subject and object. There is no need for a presumption of resulting trust to shift the onus of proof. The presumption of resulting trust does not arise. It is unnecessary. | Detailed Reasoning - Absolute entitlement: If a taxpayer is absolutely entitled to an asset as against the trustee (disregarding any legal disability), the CGT provisions apply to an act done by the trustee in relation to the asset as if it were done by the taxpayer (section 106-50). For example, if the asset is sold by the trustee, any capital gain or loss from CGT event A1 (disposal of a CGT asset - section 104-10) arises in the hands of the beneficiary/taxpayer and not in the hands of the trustee. | Detailed Reasoning - Meaning of absolutely entitled: To be absolutely entitled to an asset as against the trustee of a trust, a beneficiary must have both a vested and an indefeasible interest in an asset, and to be able to demand transfer of the asset by the trustee. It is not sufficient that the beneficiary merely has a right or entitlement under the deed to be paid a benefit. The beneficiary must have an immediate entitlement to demand transfer of the particular asset in circumstances where that entitlement cannot be defeated. The Commissioner's views on the meaning of the words 'absolutely entitled to a CGT asset as against the trustee of a trust' as used in the CGT provisions are set out in Draft Taxation Ruling TR 2004/D25 Income tax: capital gains: meaning of the words 'absolutely entitled to a CGT asset as against the trustee of a trust' as used in Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (TR 2004/D25). TR 2004/D25 explains that the core principle underpinning the concept of absolute entitlement is the ability of a beneficiary who has a vested and indefeasible interest in the entire trust asset to call for the asset to be transferred to them or to be transferred at their direction. See the rule in Saunders v Vautier (1841) 4 BEAV 115; 79 ER 282. The most straightforward application of the core principle is one where a single beneficiary has all the interests in the trust asset. Generally, a beneficiary will not be absolutely entitled to a trust asset if one or more other beneficiaries also have an interest in it. A single beneficiary who has all the interests in a trust asset will be absolutely entitled to that asset as against the trustee for the purposes of the CGT provisions if the beneficiary can (ignoring any legal disability) direct the trustee to transfer the asset to them or to transfer it at their direction. Section 106-50 provides that, immediately after a beneficiary becomes absolutely entitled to a CGT asset as against the trustee (disregarding and legal disability): • the asset is treated as the beneficiary's asset (and not the asset of the trust); and • an act done in relation to the asset by the trustee is treated as if it had been done by the beneficiary (and not by the trustee). Therefore, if a beneficiary is absolutely entitled to a CGT asset as against the trustee of a trust, the CGT provisions apply to the beneficiary of the trust, not the trustee. | Detailed Reasoning - Application to your circumstances: In the current circumstances, the shares were transferred from spouse 2, as the legal owner, to spouse 1. Generally, where the legal owner of a CGT asset disposes of the asset, a CGT event happens to the legal owner in respect of that asset. However, a CGT event will not arise where the legal owner holds the asset as trustee and the beneficiary is absolutely entitled to the CGT asset as against the trustee (section 106-50). Whether this exception applies depends on whether spouse 1, rather than spouse 2, held the beneficial interest in the shares, which requires an examination of the relevant facts surrounding their acquisition and subsequent dealings. Clear contemporaneous evidence is required in order to either establish that there was an express trust or to rebut the presumption of advancement such that a resulting trust may have arisen. Spouse 1 originally held an indirect shareholding in the Company for X years before he met spouse 2 and X years before their marriage. At the time, they were an investment manager overseeing approximately $X in investment assets and was the holder of an Australian Financial Services Licence. When the shares were acquired from the original shareholders, spouse 1 and spouse 2 understood that legal title would be recorded in the spouse 2's name as an asset-protection measure. Spouse 2 obtained legal ownership for no consideration, and spouse 1 continued to treat themself as the beneficial owner retaining access to the dividends and exercising shareholders rights on all matters of decision making. The shares remained registered in the spouse 2's name between YYYY and YYYY. Spouse 1 and spouse 2 verbally agreed at the time of acquisition that the spouse 2's role would be limited to holding legal title. Although no written trust arrangement was executed, contemporaneous conversations and conduct at the time reflected spouse 1's intention that spouse 2 hold the shares on their behalf. Spouse 2 stated in their statutory declaration, 'I understood that I was simply holding the registration on their behalf, and I have never considered myself the true owner of these shares'. Consistent with this arrangement, the shares were later transferred back to spouse 1 for no consideration, and the transfer occurred without consultation with spouse 2. Contemporaneous correspondence between spouse 1 and the transferors of the shares records spouse 1 describing themself as 'the only shareholder and director of the Company', despite the share register subsequently listing spouse 2. These statements were made in a commercial and legal context and did not identify spouse 2 as holding any ownership interest. Email correspondence with accountants during the relevant period reflects that all instructions regarding Company matters, including dividends and Division 7A issues, were directed to and responded to by spouse 1. The share transfer forms dated DDMMYYYY record the transfer of shares from the original founders to spouse 2 for no consideration. Spouse 1 retained authority to determine the registration of legal title and arranged for the shareholding to be placed in spouse 2's name. This occurred against a backdrop of genuine litigation risk due to spouse 1's role in the financial services industry. Evidence includes a letter of demand issued to another company owned by spouse 1 concerning an investor's loss. Spouse 2 states that spouse 1 had explained to her that they were exposed to potential claims and that registering the shares in spouse 2's name would protect the asset. Spouse 2 further states that they understood they were holding the registration on spouse 1's behalf and did not regard themself as the true owner. Additional communications with third-party advisors show they dealt exclusively with spouse 1 in relation to Company affairs, including the issue of dividends. These records reflect that spouse 1 continued to act in a manner consistent with a person exercising control over the shares and the Company, while there is no evidence of spouse 1 being consulted or participating in decision-making. To support the correspondence with the original founders in the Company, the following documentation was provided to demonstrate that it was always spouse 1's intention to retain the beneficial ownership of the shares, with spouse 2 holding legal title solely for asset protection: • email dated DDMMYYYY between spouse 1 and third party discussing a proposed share swap in which spouse 1 stated, 'At this point I am the only shareholder and director of the Company...' • share transfer forms dated DDMMYYYY documenting transfer of shares from the original founders of the Company to spouse 2, evidencing that spouse 1 arranged for the shares to be recorded in their name • a historical company search confirming that spouse 1 originally held an equity interest in the Company, and that this interest was subsequently transferred to spouse 2 for no consideration • a Letter of Demand issued YYYY to another company owned by spouse 1, seeking repayment to an investor for a capital loss, demonstrating the litigation risk associated with spouse 1's financial services activities • an email from spouse 1's former accountant confirming that all instructions regarding dividends and Division 7A matters were provided by spouse 1 and that the accountant was unaware of any involvement by spouse 2 in Company decision-making • various emails from third-party advisors concerning dividend payments and related matters, which were addressed to spouse 1 and show that they provided instructions in response. There is no correspondence indicating that spouse 2 was included in or consulted about these matters. Having regard to all of the material provided, the evidence as a whole establishes a clear picture of spouse 1's intention at the time the shares were acquired and recorded in spouse 2's name. The contemporaneous correspondence exchanged around the time of the acquisition including communications with the original shareholders, the accountants, third-party advisors, and spouse 2's own statements, supports the conclusion that spouse 1 did not intend to confer a beneficial interest in the shares upon spouse 2. The documentation instead indicates that legal title was placed in spouse 2's name as an asset-protection measure, while spouse 1 retained beneficial ownership of the shares. The discussions between spouse 1 and spouse 2 at the time of acquisition, in which spouse 2 agreed to hold the shares on their behalf, demonstrate an intention consistent with the creation of a trust relationship. Although no written trust deed was executed, the conduct and statements of the parties reflect an express understanding that spouse 1 would hold the shares for spouse 2's benefit, indicative of an express trust in substance. The subsequent dealings with professional advisors, together with the later transfer of the shares back to spouse 1, by spouse 2 for no consideration, is consistent with this intention. Accordingly, it is accepted that the legal and equitable interests in the shares were not the same, and that spouse 2 did not hold any beneficial interest in them. An express trust arose, with spouse 2 holding legal ownership on trust for spouse 1, who provided the value for the acquisition and continued to exercise all rights associated with ownership. Consistent with trust law principles, from the time spouse 1 became absolutely entitled to the shares as against spouse 2 (disregarding any legal disability), the shares are treated as the assets of spouse 1 rather than the trust under which spouse 2 held legal title. Spouse 1 was the sole beneficiary of this arrangement, and the shares were held solely for their use and benefit throughout the period of ownership. In these circumstances, it can be reasonably concluded that at the time the legal ownership ended upon the transfer of the shares back to spouse 1, spouse 2 held no beneficial interest in the shares. Accordingly, the transfer of the shares back to spouse 1, and the updating of the share register to reflect them as the legal owner, does not give rise to any CGT event for spouse 2. Spouse 2 is not taken to have disposed of a CGT asset under section 104-10 because they did not hold the beneficial ownership of the shares at any time. [1] All future legislative references are to the Income Tax Assessment Act 1997, unless otherwise stated.