Private ruling: Capital gains tax
Published: May 2015
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you liable for any capital gains tax (CGT) following the proposed property transfers? | A1: No

Relevant facts and circumstances: You are not an Australian resident for tax purposes. You do not have an Australian Tax File Number. The titles of three properties (the Properties) were registered in your name. You commenced legal action in the Supreme Court of an Australian state against your X (Property Dispute). You claimed that the registration of the Properties into your name occurred without your prior knowledge, authority or consent. You did not provide any funds in respect of the purchase of the relevant properties. You have never received any rental income from the relevant properties. One of the Properties has been sold to an unrelated third party. You did not receive any proceeds from the sale. You and X have reached a settlement in relation to the Property Dispute (and other disputes) under which the remaining two Properties will be transferred to X (the proposed property transfer). You have not, and will not receive any proceeds for the transfer of the relevant properties.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 100-20(1) | Income Tax Assessment Act 1997 Subsection 104-10(2) | Income Tax Assessment Act 1997 Section 106-50

Reasons for decision: Summary: You only make a capital gain or capital loss if a CGT event happens to an asset that you own (subsection 100-20(1) of the Income Tax Assessment Act 1997 (ITAA 1997)). CGT event A1 happens if you dispose of a CGT asset. Subsection 104-10(2) of the ITAA 1997 provides that you dispose of a CGT asset if a change in ownership occurs from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership does not occur if you maintain beneficial ownership. In this case we consider that while you were the legal owner of the relevant properties, X has always been the beneficial owner of the relevant properties. You did not provide any funds for the purchase of the properties, nor did you receive any income from the properties. Beneficial ownership will not change when the properties are transferred into X's name. Accordingly, you will not make a capital gain or loss when the proposed property transfers occur.