Private ruling: Capital gains tax-shares-absolute entitlement
Date of advice: 3 September 2018
Published: October 2018
Ruling period: Year ending 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Is X absolutely entitled to the shares held on trust by X’s parent Y for the purpose of section 106-50 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1:  | Q2: Does the original purchase price paid for the shares form part of the cost base of the shares that will be transferred to X? | A2:  | Q3: Does the market value for the shares form part of the cost base of the shares when the shares are transferred to X? | A3: 

Relevant facts and circumstances: Y started purchasing shares in trust for their child Y when they were a minor. The shareholding statements for the relevant shares show the shares are held on account for X by Y. Y has always declared all the dividends and franking credits income received from the relevant shares in their income tax returns. None of the shares have been sold. Y is intending to undertake an off-market transfer of the shares to X as they are no longer a minor.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 104-10(1) | Income Tax Assessment Act 1997 Section 106-50.


Answer: Yes. Based on the information provided, the Commissioner accepts that a trust arose when Y acquired the shares for X and that ignoring any legal disability X has always had a vested and indefeasible interest in the trust assets and could call for the assets to be transferred to her or to be transferred at her direction. The transferring of the ownership of these shares to X under an off-market transfer does not give rise to a CGT event because X (by virtue of section 106-50) is the owner of the shares that Y holds as trustee. Accordingly, there will be no change of ownership for the purposes of CGT when the shares are transferred to X. | Answer: Yes, as X is considered the owner of the shares for CGT purposes from the time they were purchased. | Answer: No. As per the answer to Question 2, the first element of the cost base of the shares transferred to X is the original purchase price of the shares.