Private ruling: CGT – beneficial ownership
Date of advice: 3 October 2017
Published: February 2018
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Is any capital gain made on the disposal of the property disregarded under sub-section 104-10(5) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes No capital gains tax (CGT) event happened upon the establishment of the trust as you maintained your beneficial ownership of the property (per subsection 104-10(2) of the ITAA 1997). As such, the property maintains its pre-CGT character and any capital gain or capital loss made on the disposal of the property would be disregarded under sub-section 104-10(5) of the ITAA 1997.

Relevant facts and circumstances: You purchased the property before 20 September 1985. You lived in the property with your family as your main residence from the time of purchase. The property was held as security for a bank loan which you used for investment purposes. In 20XX your investments lost value and the bank called in the loan to which the property was security. At that time you were unable to repay the loan to which the property was secured. You and family member, G entered into an agreement that G would borrow the money required to pay your outstanding loan with the bank. The Bank required the property to be transferred into G’s name and be mortgaged against the new loan. In the agreement, G would hold the property on trust for you and G would receive no financial gain from or beneficial interest in the property. A trust deed was executed on XX December 20XX between you, as Grantor and Beneficiary and G, as Trustee formalising this agreement. You continued to live in the property as your main residence and continued to pay all expenses relating to the property, including the loan repayments for the loan in the name of G after the deed was executed. You sold the property on XX March 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 104-10(5).