Private ruling: CGT disposal other
Date of advice: 26 June 2025
Published: 1 September 2025
Ruling period: Year ended 30 June 202X
Date scheme commenced: 1 July 20YY

Ruling: Q1: Can you disregard any capital gain or loss from the disposal of your ownership interest in the property? | A1: Yes. CGT event A1 happens if you dispose of a CGT asset you have an ownership interest in. However, a capital gain or loss is disregarded if you acquired the asset before 20 September 1985.

Relevant facts and circumstances: Your parent purchased the property at X on DD MM 19YY. Your parent instructed their solicitor to register the property as an estate for their life and an estate in fee simple in remainder expectant on the death of your parent in your name. The certificate of title shows this occurred on DD MM 19YY. Your parent resided at the property until their death in 20YY. You rented out the property between 20YY and 20YY. You have resided at the property from MM 20YY. You intend to sell the property to fund your aged care.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 104-20 | Income Tax Assessment Act 1997 section 128-10

Reasons for decision: Summary: An ownership interest in the property was transferred to your parent as an estate for life before 19YY. On the death of the life interest owner CGT event C1 in section 104-20 (ITAA 1997) happened. The Commissioner does not consider that CGT event C2 happens in this case because the legal life interest is not an intangible asset. If the life interest owner makes a capital gain or capital loss from CGT event C1 happening, it is disregarded under section 128-10. The death of the life interest owner has no CGT consequences for the remainder owner. The remainder owner does not acquire any asset from the life interest owner, their existing interest is merely enlarged. Consequently, no additional amount can be included in the first element of the cost base of the remainder owner's asset (now a fee simple interest unencumbered by the life interest). Together legal life and remainder interests represent the entire freehold interest in the land. By 'creating' a life interest, the original owner is actually disposing of part of the freehold interest in the land in a similar way to the disposal of a percentage interest in the property. Therefore, the creation of legal life and remainder interests involves disposals of the original asset by the original owner if created inter vivos or disposals by the legal personal representative or trustee of a deceased estate if the interests were bequeathed under the deceased's will. You were the beneficial owner from January 19YY (and the legal and beneficial owner from MM 20YY) and the interest is a pre-CGT asset, therefore the capital gain on disposal is disregarded.