Private ruling: Capital gains tax - main residence exemption
Date of advice: 5 August 2017
Published: November 2017
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Will the sale of the property result in a capital gains tax (CGT) event for the parent? | A1: No A change in the legal ownership of an asset without a change in the beneficial ownership will not constitute a disposal for CGT purposes (subsection 104-10(2) of the Income Tax Assessment Act 1997 ). The parent has legal ownership in the property (name is on the title deed), however they are not the beneficial owner (further information on the definition of a beneficial owner can be found in Taxation Ruling IT 2486 and Taxation Determination TD 92/106). The beneficial owner is the child. When the property is sold there are no CGT consequences for the parent. | Q2: Is the child eligible to apply the main residence exemption when the property is sold? | A2: Yes The main residence exemption applies to disregard a capital gain or capital loss where an individual owns the dwelling and occupies it as their principal place of residence throughout their ownership period. As shown in question one above, the child is the beneficial owner of the property and a CGT event happens for them when the property is sold. The property has been the child’s principal place of residence in their ownership period therefore a capital gain or capital loss they make from the property sale will be disregarded under the main residence exemption.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. In 2008 the child entered into a contract to purchase the property. After the contract was entered into, the child sought finance to complete the purchase. The child obtained finance however the finance required that the parent be included on the property title. The child has occupied the property as their principal place of residence The child has solely met the loan obligations and all expenses associated with the property

Relevant legislative provisions: Income Tax Assessment Act 1997 104-10(2) | Income Tax Assessment Act 1997 118-110