Private ruling: CGT - legal v beneficial ownership
Date of advice: 21 June 2022
Published: September 2022
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will you have a capital gains tax (CGT) event A1, upon disposal of the property? | A1: No. CGT event A1 happens when you dispose of a CGT asset. The beneficial owner of the CGT asset will be liable to determine the capital gain or loss from the event. In this case, we accept the beneficial owner is different to the legal owner. Therefore, upon the disposal of the property, there will not be a CGT event as there is a different beneficial owner of the property.

Relevant facts and circumstances: Your parent (deceased) passed away and left a Will. The deceased owned a property. The deceased's will called for a beneficiary's share of the estate to be held on trust by the trustee. You are the trustee and beneficiary of the deceased estate. Your sibling is a beneficiary of the deceased estate. No testamentary trust was created from the will. The inheritance received by the beneficiaries was transferred into a bank account in your name. You purchased a property in your name as the sole owner to be used as a main residence for a beneficiary. The beneficiary resided in the property as the beneficial owner. You didn't reside at the property during the entire ownership period. You maintained the property the majority of the ownership period with funds from a bank balance from the beneficiaries inheritance. When the inheritance funds ran out, you paid the property expenses from your personal funds. You put the property on the market and it has sold and settled. The majority of the sale proceeds were dispersed to the beneficiaries' legal representative for distribution. You sought reimbursement for your out of pocket expenses from the sale. You intend on transferring the remaining sale proceeds to the beneficiary. You own a separate property in which you reside as your main residence. You are an Australian Resident.

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