Private ruling: CGT - legal vs beneficial ownership
Date of advice: 28 July 2022
Published: November 2022
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the sale of The Property result in a capital gains tax (CGT) event for you? | A1: No. Having considered your circumstances and the relevant factors relating to your situation, the Commissioner accepts that although you were the legal owner of the property, it was never intended for you to have any beneficial ownership of the property. Therefore, you will not have a CGT event A1 or any other CGT event occurring when your legal ownership ends.

Relevant facts and circumstances: You and xxxx were in a de facto relationship for approximately XX years. You had two children during this period but decided to end the relationship amicably. At the end of the relationship, you and Ex-De facto determined that you no longer wished to live together and Ex-De facto purchased his own property at the Property. As Ex-De facto was unable to obtain a mortgage in his name only, on the advice of your Mortgage Broker, Ex-De facto applied for the Property in both of your names as this increased his borrowing capacity. You and Ex-De facto were unaware that this could potentially have capital gains tax ramifications in the future. Ex-De facto purchased and moved to the Property and you remained at xxxx. Although the Property was now legally owned by both yourself and Ex-De facto, neither of you intended for you to benefit from the Property. Ex-De facto was the only one who contributed financially to the Properties mortgage. The Property was used by Ex-De facto for the entire time of ownership and was not rented at any time. When the Property was sold in 20XX Ex-De facto used the proceeds to purchase his new home which he was able to purchase, solely in his name.

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