Private ruling: CGT - legal v beneficial ownership
Date of advice: 12 December 2023
Published: 5 February 2024
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Does the sale of the property result in a capital gains tax (CGT) event for you? | A1: No. CGT Event A1 under section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997)occurs when there is a change of ownership of a CGT asset. The sale of the property has not triggered CGT event A1 for you. The Commissioner accepts that in your circumstances, although you were a legal owner of the property, it was never intended for you to have any beneficial ownership of the property. It can be reasonably concluded that at the time of the change of legal ownership, when you transferred your interest in the property, the CGT event A1 did not happen to you when your ownership interest in the property was sold as you did not hold both legal ownership and beneficial ownership in the property.

Relevant facts and circumstances: You purchased a property (the Property) alongside your child (Person A), and your child's spouse (Person B). You were registered on the title deed as joint tenants, alongside Person A and Person B, Each of the title owners held a 1/3 share in the Property. Your involvement was for the purpose of enhancing the loan application for Person A and Person B, as they could not satisfy the requirements to obtain the loan for the Property at that time. On XX XX 20XX, Person A paid the full deposit for the Property. You did not provide any money towards the purchase. You did not make any repayments towards the home loan. You never lived in the Property The Property was the main residence of Person A and Person B. The Property was never used to produce assessable income. Bank statements evidence that the home loan was in the names of Person A and Person B only. Bank statements evidence that mortgage repayments were made by Person A. Person A and Person B paid all utilities, rates, and insurances. On XX XX 20XX, the Property was sold. Person A received all proceeds from the sale of the Property.

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