Private ruling: Absolute entitlement - CGT event E5
Date of advice: 24 February 2026
Published: 20 April 2026
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: If the Fund transfers the registered legal title in the property to the member will a capital gains tax (CGT) event occur? | A1: Yes. | Q2: Is the first element of the member's cost base for the property its market value at X February 20XX? | A2: No.

Relevant facts and circumstances: The Fund is a non-regulated superannuation fund, established on X XXX 19XX. Individual A is the sole member of the Fund. Individual A's date of birth is X and they turned X on X XXX 20XX. Individual A retired from work, and has not been in paid employment since that date. The Fund has never paid any pension to Individual A. The Fund's sole asset is real property. The property was purchased by the Fund on X XXX 19XX. A further parcel of land was added to the holding on X XXX 20XX. The terms of the Fund are set out in the Deed and Rules dated X. The Fund has not agreed to a different date for the definition 'Age for Retirement' pursuant to clause 2 of the Trust Deed. The Funding Employer named in the Deed, is a company. The Fund did not provide the member with an advice as to their benefit pursuant to Rule 4 of the Deed rules. The Fund did not take out any policies of life insurance over Individual A and did not receive any proceeds from any such policies.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-75 | Income Tax Assessment Act 1997 section 106-50

Reasons for decision: Detailed Reasoning - CGT event E5: When a beneficiary becomes absolutely entitled to a CGT asset of the trust as against the trustee, CGT event E5 happens under section 104-75 of the Income Tax Assessment Act 1997 (ITAA 1997). The time of the event is when the beneficiary becomes absolutely entitled to the asset. The trustee will make a capital gain in relation to CGT event E5 if the market value of the asset is more than its cost base. The trustee will make a capital loss if the market value is less than the asset's reduced cost base. Note that any capital gain made by the trustee is disregarded if the asset was acquired by the trustee before 20 September 1985. | Detailed Reasoning - Absolute entitlement: Where a beneficiary is absolutely entitled to a CGT asset as against the trustee, section 106-50 of the ITAA 1997 states that any act done in relation to the CGT asset by the trustee will be treated as if the act was done by the absolutely entitled beneficiary. | Detailed Reasoning - Example: An individual becomes absolutely entitled to a CGT asset of a trust. The trustee later sells the asset. Any capital gain or loss from the sale is made by the individual, not the trustee. Taxation Ruling TR 2004/D25 Income tax: capital gains: meaning of the words 'absolutely entitled to a CGT asset as against the trustee of a trust' as used in Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (TR 2004/D25) considers absolute entitlement in the context of a superannuation fund. Paragraph 6 states: This Ruling also does not apply to a member of a superannuation fund in respect of assets held by the fund. There is an extensive statutory regime governing the taxation of superannuation funds, the payment of benefits by funds and the taxation of those benefits in the hands of a recipient. It is considered that the entitlement of a member to benefits is governed entirely by that statutory regime and for that reason an entitlement to the fund's assets can never arise under the CGT provisions. Therefore, a member of a superannuation fund is not treated as if they are absolutely entitled for CGT purposes to the assets of the fund or to assets held in the member's account. Paragraphs 136-139 provide further details about superannuation funds: 136. Anomalies may arise if, for example, the sole member of a self managed superannuation fund is taken to be absolutely entitled to the assets of the fund for CGT purposes. 137. Firstly, a complying superannuation fund is taxed at a concessional tax rate on income generated by the fund, including a net capital gain made by the fund. Were a member of the fund taxed on the basis that the member was absolutely entitled to the fund's assets, then capital gains in respect of those assets would be taken into account in working out the member's net capital gain that would be taxed at the member's marginal tax rate. That outcome is inconsistent with the policy objectives underpinning the taxation of superannuation funds. 138. Secondly, CGT event E5 (see section 104-75 of the ITAA 1997) happens when a beneficiary becomes absolutely entitled to a trust asset. Were the concept of absolute entitlement relevant to superannuation funds, then, depending on the structure of the fund, a member may trigger CGT event E5, for example, on termination of their employment or on turning 65. It may be that any capital gain or loss made by the member will be disregarded under section 118-305 of the ITAA 1997, but that provision does not apply to the trustee of the fund. If CGT event E5 happened, the trustee would make a capital gain or loss. This would introduce an additional taxing point that is outside the superannuation regime and is in addition to any tax imposed under that regime on the member in respect of any benefit when it is actually received by the member. 139. We take the view that the legislative scheme that regulates the taxation of superannuation funds, the payment of benefits by those funds and the taxation of those benefits is a complete code in respect of those matters. This does not mean that the CGT provisions cannot apply if a CGT event happens to an asset of a superannuation fund. It simply means that the CGT concept about the entitlement of a beneficiary to trust assets does not apply. Therefore, a member of a superannuation fund is not treated as if they are absolutely entitled for CGT purposes to the assets of the fund or to assets held in the member's account. We take this view regardless of whether the member has met a condition of release for the payment of benefits under the Superannuation Industry (Supervision) Regulations 1994. | Detailed Reasoning - Application to your circumstances: In this case we do not consider that the member became absolutely entitled to the property upon reaching the 'age of retirement' as defined in the Fund's Deed. As set out in TR 2004/D25, a member of a superannuation fund is not treated as if they are absolutely entitled for CGT purposes to the assets of the fund or to assets held in the member's account. This is regardless of whether the member has met a condition of release for the payment of benefits. Therefore, when the trust transfers the ownership of the asset there will be a change in both legal and beneficial ownership which will cause a CGT event to occur. | Detailed Reasoning - Question 2: As there was no transfer of ownership of the property to the member in the 20XX financial year, the cost base of the property for the member will not be its market value as at XX XXX 20XX.