Private ruling: CGT change in ownership
Date of advice: 9 February 2024
Published: 15 April 2024
Ruling period: 30 June 20XX | 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the proposed transfer of the property from Company A ATF Fund A to Company A ATF Fund B to correct a contractual error trigger any CGT event under section 104-5 of the Income Tax Assessment Act 1997 (ITAA 1997) ? | A1: No. CGT event A1 happens if there is a disposal of a CGT asset, where there is a change in ownership. A CGT event A1 may arise when the title of a property is transferred. You provided all funds for the purchase of the property. It was your intention for the property to be purchased under the name of Company A ATF Fund B. However, when the property was purchased, there was an error in the contract where the contract included the purchaser as Company A ATF Fund A instead of Company A ATF Fund B. The legal owner of the property is recorded on the title deed for the property issued under state legislation. In your case, Company A is the legal owner of the property as they are recorded on the title deed of the property issued by State A Land Registry Services. Based on the facts, the Commissioner accepts that in your circumstances, there has been no change in ownership, and a CGT event will not occur when the property is transferred from Company A ATF Fund A to Company A ATF Fund B.

Relevant facts and circumstances: Fund B was established on a specified date. The trustee and beneficiary of Fund B were Person A and Person B. Fund B appointed Company A as the new trustee on a specified date. Shareholder and directors of the new trustee are Person A and Person B. On a specified date a contract of sale was entered into to purchase a property with an intention for Fund B to be the purchaser of the property. However, there was a mistake in the contract where the purchaser outlined as Company A ATF Fund A instead of Company A ATF Fund B. There has been no change to the beneficiaries of Fund B or directors and shareholders of Company A since the purchase of the property. At the time of the contract no one picked up the mistake with the purchaser's name on the contract. The issue of the incorrect super fund on the contract was identified by your conveyancing solicitor when they looked at the old contract. Fund B provided all the funds to acquire the property and there were no borrowings. Neither Person A or Person B have any relationship with Fund A. Person A contacted the Australian Business Register (ABR) to confirm that Fund A was not related to either Person A or Person B. The property has always been treated as owned by Fund B since the time it was acquired as evidenced from the Fund B past financial statements. The property was registered under the name of Company A and they are the current legal holder of the property as per the State A Land Registry Services Title Search. However, in State A a trust relationship is not recorded on the title search. Fund B applied for a private ruling with the State A Commissioner of State Revenue regarding the proposed transfer and the commissioner confirms that duty will not be payable on the proposed transaction as it qualifies for exemption.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-5