Private ruling: CGT - legal v beneficial ownership
Date of advice: 22 December 2022
Published: 20 February 2023
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Did CGT event A1, or another CGT event, happen to you when the property was sold? | A1: No. CGT event A1 occurs when there is a disposal of an ownership interest in a CGT asset. However, CGT event A1 does not occur if there is only a change of legal ownership and not a change of beneficial ownership. Based on the facts, the Commissioner accepts that in your circumstances, although the title of the property was in your name, it was never intended for you to have, and you never had, any beneficial ownership of the property and it can be reasonably concluded that at the time ownership transferred, that is, when the property was sold, you did not dispose of a beneficial ownership interest. Consequently, a CGT event did not happen to you when the property was sold.

Relevant facts and circumstances: You purchased a property. Your child was unable to obtain a bank loan for the purchase of the property due to a poor credit record. You took out the home loan on your child's behalf. The bank insisted that the title to the property also be in your name. The property was used as your child's main residence. Your child provided the deposit for the property, paid all loan interest, capital repayments and expenses in relation to the Property. They also spent considerable sums maintaining and improving the house and garden. Your child chose to purchase in the area as it was somewhere they could afford and it was a way of getting into the housing market. The property has now been sold. Your child used the proceeds from the sale to purchase a new home.

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