Private ruling: Capital gains tax
Date of advice: 16 September 2020
Published: October 2020
Ruling period: Year ending 30 June XXXX
Date scheme commenced: 1 July XXXX

Ruling: Q1: Is there a capital gain event on the transfer of the property to your parent? | A1: No. Having considered your circumstances the Commissioner accepts that your interest in the property was held on trust for your parent and that they were absolutely entitled to the property. Consequently, the entire property is treated as having been your parent's asset for capital gains tax purposes. Further information can be found by searching TR 2004/D25 on ato.gov.au

Relevant facts and circumstances: Your parents used the proceeds of the sale of their home to purchase the property. You are a sole child and your parents advised that you would one day inherit the parties' respective estate and so your parents registered the title of the property into your name. At the time of purchase your parents and you agreed that the house was to provide for permanent accommodation for your parents and the benefit of the property would not pass to you until the death of both your parents. All expenses relating to the property were paid for by your parents including several substantial repairs and renovations. All water supply charges were paid by your parents including water usage, supply charges and sewerage. Your parents also paid the full electricity charges, all council rates and covered full house and contents insurance. You never resided at the property. Your parents resided in the property as their main residence Your parents' marriage has now broken down and they are in the process of finalising their divorce. One of your parents will remain in the property and will pay the other their agreed share of the value of the property. At the date of the divorce settlement the title for the property will pass from you to your xxxx for no consideration.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 102-20 | Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 106-50 | Income Tax Assessment Act 1997 Section 118-110 | Income Tax Assessment Act 1997 Section 126-5 | Income Tax Assessment Act 1997 Division 115.