Private ruling: CGT - legal vs beneficial ownership
Date of advice: 6 December 2023
Published: 29 January 2024
Ruling period: Year ended 30 June 20YY
Date scheme commenced: DDMM20YY

Ruling: Q1: Will a capital gains tax event occur when you transfer your ownership interest in the Property to Child A, Child B and Child C? | A1: No. Based on the facts, the Commissioner accepts that in your circumstances, although you are a legal owner of the Property, you do not have any beneficial ownership of the Property. This means a CGT event will not occur for you when you are removed from the legal title of the Property. For further information, Taxation Ruling TR 93/32 Income tax: rental property - division of net income or loss between co-owners provides guidance on the issues involved when the equitable interest does not follow the legal title.

Relevant facts and circumstances: The Property was purchased has never been used for income producing purposes. The legal title holders of the Property are Person A, Person B and Person C. Person A, Person B and Person C own X of the total Y undivided shares in the Property as joint proprietors. Person C owns an additional X of the total Y undivided shares in the Property as a sole proprietor. You provided a copy of the Minutes of Proposed Orders (by consent) (Proposed Orders) by the Family Court of Australia. The Proposed Orders include: a. That Person A and Person D are to purchase a property. b. The property to be put in the names of Person A, Person C and Person B as trustees for Child A, Child B and Child C. c. Person C will have the right to reside in the property until the youngest child attains the age of XY. d. Upon Child C attaining the age of XY, the property is to be transferred to Child A, Child B and Child C as tenants in common in equal shares. Person C resided in the Property in accordance with the Proposed Orders. Child C reached the age of XY in 20YY and your portion of the Property is to be transferred to the three children as equal tenants in common in accordance with the Proposed Orders.

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