Private ruling: Capital gains tax
Date of advice: 17 November 2016
Published: March 2017
Ruling period: Year ending 30 June 201X | Year ending 30 June 201X
Date scheme commenced: 1 July 201X

Ruling: Q1: Are you the beneficial owner of the property? | A1: Yes

Relevant facts and circumstances: In 20XX you wanted to purchase your first residential property but were unable to finance the purchase. Your family member obtained the mortgage to facilitate the purchase of the property on your behalf. You paid the initial deposit for the property and have made all repayments on the property mortgage. You have used the property as your principle residence since the date of purchase. You have attended to all the maintenance and upkeep of the property, including all ownership costs. All improvements undertaken to the property were done by you, at your choice and cost. You have not paid any rent or been reimbursed for capital improvements on the property.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 104-10(2)

Reasons for decision: Summary: The capital gains tax (CGT) provisions apply where an asset acquired on or after 20 September 1985 is disposed of. However, subsection 104-10(2) of the Income Tax Assessment Act 1997 (ITAA 1997) states that a change in the legal ownership of an asset without a change in the beneficial ownership will not constitute a disposal for CGT purposes. A beneficial owner is defined in Taxation Ruling IT 2486 and Taxation Determination TD 92/106. A beneficial owner is the person or entity who is beneficially entitled to the income and proceeds from the asset. A legal owner is the individual who has their name on the legal documents associated with the CGT asset, an example is the title deed for a property. An individual can be a legal owner but have no beneficial ownership in an asset. It is the beneficial owner of a CGT asset that is liable for capital gains tax when a CGT event occurs. Application to your circumstances Your family member is the legal owner of the property with their name on the title deed. However, you contributed the initial deposit with all subsequent costs, decisions and improvements regarding the property incurred by you. You are beneficially entitled to any income and proceeds from the property. It is determined that although you are not the legal owner, you are the beneficial owner.