Private ruling: CGT - legal vs beneficial ownership
Date of advice: 25 January 2024
Published: 11 March 2024
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will a capital gains tax A1 event occur in respect of your ownership interest if the property is disposed of? | A1: No. Based on the facts, the Commissioner accepts that in your circumstances, although you are a legal owner of the property, you do not have any beneficial ownership of the property. This means a CGT event will not occur for you when you are removed from the legal title of the property. For further information, Taxation Ruling TR 93/32 Income tax: rental property - division of net income or loss between co-owners provides guidance on the issues involved when the equitable interest does not follow the legal title.

Relevant facts and circumstances: The Property has never been used for income producing purposes. The legal title holders of the Property are Person A, Person B and Person C. Person D is not named as a legal title holder. Person A and Person D initiated court proceedings to obtain a declaration that Person D is the equitable owner of the Property and for the Property's legal title to be transferred to them. The court ordered Person A, Person B and Person C hold the property on trust for Person D. The effect of the court order is that it establishes the beneficial owner of the Property as Person D and therefore as the beneficial owner any applicable capital gain tax is payable by them. Person D made all repayments of the Property's loan and has paid for all expenses and outgoings of the Property since it was purchased. Person D has lived at the property since XXXX as his principal place of residence.

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