Private ruling: CGT - legal and beneficial ownership
Date of advice: 12 September 2023
Published: 24 October 2023
Ruling period: 1 July 2023 to 30 June 2025
Date scheme commenced: 1 July 2023

Ruling: Q1: Will a Capital Gains Tax (CGT) event occur for you when the legal to the Property is transferred to Person A? | A1: No. Based on the facts, the Commissioner accepts that in your circumstances, although you are a legal owner of the Property, you do not have any beneficial ownership of the Property. This means a CGT event will not occur for you when you are removed from the legal title of the Property. For further information, Taxation Ruling TR 93/32 Income tax: rental property - division of net income or loss between co-owners provides guidance on the issues involved when the equitable interest does not follow the legal title.

Relevant facts and circumstances: The Property was purchased in 19XX for approximately $X and is less than 2 hectares in size. You and Person A are the registered owners of the Property. You hold 50% legal interest in the Property. Person A contributed approximately $X towards the purchase the Property. You did not contribute your own funds to the deposit. A loan was obtained to finance the additional monies, approximately $X, needed to acquire the Property. You and Person A are co-borrowers on the loan obtained to purchase the Property. You entered into this arrangement to help Person A acquire the Property to enable them to live an independent life. Person A has resided at the Property since it was acquired. They continue to reside at the Property as their main residence. You resided at the Property between 19XX and 19XX. The Property has never been used to derive assessable income. Person A has paid all loan repayments and expenses associated with the Property such as rates, water rates, and insurance. The Property incurs state land tax, which you currently contribute 50%. Person A has made provisions in their Will to reimburse you for these state land tax contributions by way of their deceased estate unless the Property is sold at an earlier point in time. You will receive no monies when your name is removed from the legal title. Repayment of your land tax contributions will be the only monies you will receive in relation to the Property. Assumption For the purpose of this ruling, it is assumed that the transfer will occur during the period of this ruling.

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