Private ruling: Cost base and date of acquisition
Date of advice: 2 April 2026
Published: 22 June 2026
Ruling period: Period ending DD MM YY
Date scheme commenced: DD MM YY

Ruling: Q1: Are the beneficiaries deemed to have acquired the property at Address A on the date of distribution from the family trust? | A1: As beneficiaries of the family trust, Person A and Person B, are legally entitled to the property held in the family trust. They held a beneficial interest in the property. However, unless absolutely entitled to the asset, they are not deemed to have acquired the asset until it was distributed to them. As there were multiple beneficiaries of the trust and the asset was not fungible, there can be no absolute entitlement to the asset. As such the relevant date on which to get a market valuation for the purposes of the cost base calculation is the day the property was distributed to them from the family trust on DD MM YY.

Relevant facts and circumstances: On DD MM YY a deed was executed for the Family Trust. This deed was between Person C as settlor and Trustee A and Trustee B as trustees of the trust. The beneficiaries of the trust were Person A and Person B. On DD MM YY Trustee B retired as trustee and Trustee C was appointed as trustee in their place. On DD MM YY the property at Address A was acquired and registered under the trust. The property was the only asset of the trust. The property was held in trust for Person A and Person B. The property was used by the family until it's distribution to the beneficiaries. On DD MM YY the property was distributed to Person A and Person B as beneficiaries and was transferred into their names as joint proprietors. Person A resided in the property as their principal place of residence until YY. The property was then Person B's Principal place of residence.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 104-75(2) | Income Tax Assessment Act 1997 subsection 112-20(1) | Income Tax Assessment Act 1997 subsection 160-50(1)

Reasons for decision: Detailed Reasoning - Detailed reasoning: Section 106-50 of the ITAA 1997 provides that a beneficiary that is absolutely entitled to a CGT asset as against the trustee, will be treated as the new owner of the asset if a CGT event happens to the asset. In such a case the beneficiary and not the trustee would be required to account for any capital gain or capital loss made on the disposal of the asset in their taxable income. Taxation Ruling TR 2004/D25 Income tax: capital gains: meaning of the words 'absolutely entitled to a CGT asset as against the trustee of a trust' as used in Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (TR 2004/D25) explains the circumstances in which a beneficiary of a trust is considered to be absolutely entitled to a CGT asset of the trust as against its trustee. The TR steps out several criteria for absolute entitlement. A beneficiary will be held to be absolutely entitled to an asset as against the trustee of a trust if the beneficiary has a vested, indefeasible and absolute entitlement in the trust asset, and is entitled to require the trustee to deal with the trust asset as the beneficiary directs. If a title is held in a trust, then the trustee generally holds the title and has the power of sale. This power is generally provided through the trust deed. A beneficiary's interest in an asset is contingent on reaching a certain age or event in order for ownership of the asset to be transferred. Their interest in the asset in such an instance cannot be indefeasible. The TR also addresses that where there are multiple beneficiaries to an estate, then no one beneficiary is generally able to establish a vested and indefeasible interest in any one particular asset of an estate. The only instance in which such a beneficiary could be considered absolutely entitled is where the assets of the estate are fungible Fungibility of an asset, in instances where more than one beneficiary has an interest in the assets of an estate, is discussed in paragraphs 23 through 25 of TR 2004/D25. Assets are fungible if each asset matches the same description such that one asset can be replaced with another, or if they are of the same type. Land is rarely fungible because each parcel is unique (paragraph 94 of TR 2004/D25). Real estate is traded based on the actual sale price, not the sale price per unit. | Detailed Reasoning - Application to your circumstances: The property was acquired by the family trust in YY and held in trust for Person A and Person B until a distribution date. As there were multiple beneficiaries with an interest in the asset, and the asset was not fungible, no one beneficiary could be seen to have an indefeasible right to the asset. This means that although they had a beneficial interest in the property, they had no absolute entitlement to it and are deemed to have acquired the asset when it was distributed to them on DD MM YY.