Private ruling: CGT - legal versus beneficial ownership
Date of advice: 5 February 2024
Published: 25 March 2024
Ruling period: Year ending 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Will you have a CGT event upon the disposal of the property? | A1: No. Having considered your circumstances and the relevant factors relating to your situation, the Commissioner accepts that although you are the legal owner of the property, you are only holding the property as a trustee of a trust, and that it was also never intended for you to have any beneficial ownership of the property. Therefore, you will not have a CGT event when the property is sold.

Relevant facts and circumstances: Several decades ago, individual 1 purchased a property in Australia (the property). Following the purchase, individual 2 also lived in the property, along with you and another individual (the other individual) who were minors at the time. Individual 1 and individual 2 made the decision to stop living together in the property several years after purchasing the property, and under legal proceedings there was a Deed of Trust drawn up to cover the settlement. The settlement gave individual 2 a life tenancy in the property while the ownership and costs remained with individual 1. However, following the settlement individual 1 was holding the property on trust for individual 2 under the terms of the Deed of Trust, and the property was to remain in individual 1's name until their death. You have supplied a copy of the Court Orders for the settlement, which specifies that individual 1 was ordered to execute a declaration of trust that they hold the property for individual 2 until their death, and thereafter for the benefit of you and the other individual as tenants-in-common in equal shares. Since the settlement was finalised, individual 2 has remained living in the property continuously. Individual 1 passed away several years ago, and their Will left the property to you and the other individual in equal shares as tenants in common, however you and the other individual both owned the property at that time as Trustees of the Trust, on behalf of individual 2. The other individual passed away several years after individual 1 passed away, and their will left their share of the property to you as the sole owner, and the sole Trustee of the Trust, holding the property on behalf of individual 1. Individual 1 is now elderly, and is looking to sell the property and find a more suitable property to live in. Under the terms of the settlement and Deed of Trust, as the sole trustee you must provide individual 2 with a place to live. You intend on listing the property for sale and selling the property as soon as possible.

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