Private ruling: CGT - disposal of property
Date of advice: 24 July 2025
Published: 22 September 2025
Ruling period: 30 June 20XX
Date scheme commenced: X August 20XX

Ruling: Q1: Will the disposal of the property result in a capital gain or loss when you gift your 50% ownership interest to Person B? | A1: Yes. Summary The property was purchased for $XXX,xxx and the contract signed on DDMMYY by Person B and yourself. Person B made a deposit to the real estate on DDMMYY in the amount of $X,XXX. You were originally going to be the guarantor and use a property solely owned by yourself as collateral to help Person B get a home loan due to them not having enough savings to finance the loan. The banks would not accept you as just being the guarantor due to the size of the loan and Person B not having sufficient funds and advised that you would need to be included in the home loan application and also added to the property title with you having a 50% ownership interest in the property You only agreed to this as Person B is to refinance the home loan in their own name by the end of 20XX calendar year, and once Person B has done this you will then gift your 50% ownership interest in the property to Person B. Person B contributed to all the ongoing expenses of the property and loan; however, you and v did not have a written arrangement showing that the property was purchased beneficially for Person B. You have a legal and equitable ownership interest in the property and will be required to report the CGT when you gift your share of the property to person B.

Relevant facts and circumstances: In 20XX Person B wanted to purchase a property Person B found the place they wanted to purchase Person B did not have enough savings to finance a home loan You were originally going to use a property you owned as collateral and go guarantor on the loan The banks would not accept you as just the guarantor and had you included on the loan and property title as 50% owner, due to the amount needed to be borrowed to purchase the property You agreed to this on the promise from Person B that as soon as they can refinance the loan in their name only, and this to done by the end of the 20XX calendar year The home loan was taken out with a bank and an offset account was included On DDMMYY you and Person B signed the purchase contract for the property for $XXX,XXX On DDMMYY Person B paid the deposit for $X,XXX Person B has paid for everything to do with legal expenses You have not contributed anything to the house itself, e.g. upkeep, council rates etc. Once Person B has refinanced the loan you will then gift your share of the property Assumptions Person B will refinance the home loan in their own name sometime before the end of the 20XX calendar year Once this has been done you will then gift your 50% ownership interest in the property to Person B

Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 section 104-10 | Income Tax Assessment Act 1997 section 118-130

Reasons for decision: Detailed Reasoning - Legal and beneficial ownership: The ATO considers that there are extremely limited circumstances where the legal and equitable interests are not the same and that there is sufficient evidence to establish that the equitable interest is different from the legal title. A person's legal interest in a property is determined by the legal title to that property under the property law legislation in the State or Territory in which the property is situated. Where it is asserted that the beneficial ownership and legal ownership of a property are not the same, there must be evidence to show that the legal owner holds the property in trust for the beneficial owner. Relevant evidence includes information that evidences the intentions of the parties at the time the property was purchased or transferred from one legal owner to another, and evidence of contributions made by the parties towards the purchase price. Taxation Ruling TR 93/32 Income tax: rental property - division of net income or loss between co-owners (TR 93/32) contains guidance on the issues involved where the equitable interest in a property may not follow the legal title. As stated in TR 93/32 paragraphs 38 to 41, it has been said that if the equitable interest does not follow the legal title, there is some basis for the profit/loss to be distributed on the equitable and not the legal basis. It was explained in Calverley v Green 56 ALR 483, Dean J said (at p 500): 'It is simply that there are certain relationships in which equity infers that any benefit which was provided for one party at the cost of the other has been so provided by way of "advancement" with the result that the prima facie position remains that the equitable interest is presumed to follow the legal estate and to be at home with the legal title or, in the words of Dixon CJ, McTiernan, Fullagar and Windeyer JJ in Martin v Martin (1959) 110 CLR 297 at 303, that there is an "absence of any reason for assuming that a trust arose".' Cases where the title includes the name of a person who is a nominee or trustee, must be decided on an individual basis on the evidence available to establish that fact. Authority can be found in Napier v Public Trustee (Western Australia) 32 ALR 153 where the court accepted there was sufficient evidence to establish that the equitable interest was different from the legal title. Aickin J said (at p 158): 'The law with respect to resulting trusts is not in doubt. Where property is transferred by one person into the name of another without consideration, and where a purchaser pays the vendor and directs him to transfer the property into the name of another person without consideration passing from that person, there is a presumption that the transferee holds the property upon trust for the transferor or the purchaser as the case may be. This proposition is subject to the exception that in the case of transfers to a wife or a child (including someone with respect to whom the transferor or purchaser stands in loco parentis ) there is a presumption of advancement so that the beneficial as well as the legal interest will pass. Each of the presumptions may be rebutted by evidence.' We consider that there are extremely limited circumstances where the legal and equitable interests are not the same and that there is sufficient evidence to establish that the equitable interest is different from the legal title. We will assume where taxpayers are related, e.g., husband and wife, that the equitable right is exactly the same as the legal title. Any capital gain or loss should also be apportioned on the same basis as the rental income or loss. | Detailed Reasoning - Express trust: An express trust is one intentionally created by the owner of property in order to confer a benefit upon another. It is created by express declaration, which can be affected by some agreement or common intention held by the parties to the trust. For an express trust to be created it is necessary that there is certainty of the intention to create a trust, subject matter and the object of the trust. While trusts can be created orally, all State Property Law Acts contain provisions that preclude the creation or transfer of interests in land except if evidenced in writing. | Detailed Reasoning - Resulting or implied trusts: On the purchase of real property, a resulting trust may be presumed where the legal title that vests in one or more of the parties does not reflect the respective contributions of the parties to the purchase price. A resulting trust arises by operation of law and falls into two broad categories. One such category is where someone purchases property in the name of another. As noted by Gibbs CJ, in Calverley v Green [1984] HCA 81:( Calverley v Green case). A trust is presumed in favour of the party providing the purchase money. If an individual purchases and then pays for a property, but legal title is transferred to another person at their direction, the presumption of a resulting trust arises - the property is held in trust for them. The law presumes that the purchaser, as the person providing consideration for the purchase intended to retain the beneficial interest, although the legal interest is in the others name. However, there are instances where this application may not apply, including: • where there is evidence of a specific intention to hold beneficial interest in the property for another person who contributed no amount, or a lesser amount, towards the purchase price. • where the presumption of advancement applies • where a court orders that property is held on trust (not relevant to your circumstances). | Detailed Reasoning - Presumption of advancement: The presumption of advancement is an equitable principle where a person puts property in the name of another person with whom they have a close familial relationship. The presumption only applies to transfers and purchases made by people who stand in particular relationships, including parents and their children. Under the presumption of advancement, the property is transferred with the intention of transferring both the beneficial interest in the property as well as the legal title. The parties hold their equitable interests in the property in the same proportions as their legal interests. In Calverley v Green, three important principals in relation to the presumption of advancement Gibb CJ found: • Where one party purchases property in the name of the other, it will be presumed that the first party did not intend the other to take a beneficial interest unless there is such a relationship between the parties as gives rise to a presumption of advancement. • The sort of relationship where the presumption will arise is where the relationship is such that it is more probably than not that a beneficial interest was intended to be conferred. • The presumption of advancement may be rebutted by evidence of the actual intention of the purchaser at the time of purchase. If two parties have contributed to the purchase and the legal interest does not reflect the proportions of their contributions, the intentions of both parties at the time of purchase are important. The onus of rebutting the presumption of advancement lies with the party who is considered as having gifted the property to another (usually the purchaser). Evidence is required that demonstrates that the purchaser did not intend the property to be a gift to the other party. In Commissioner of Taxation v Bosanac (No 7) the argument of a resulting trust versus the presumption of advancement was discussed at length. The court outlined the following principles: • Although it is referred to as a presumption of advancement, the dominant approach in Australia is that it is strictly not a presumption. • Rather it is a description of certain circumstances, being the existence of particular relationships, where the presumption of a resulting trust does not arise. • Generally, the court will look to the dealings, documents and communications at the time of the purchase to determine whether there was intention to retain a beneficial interest. However, evidence of the dealings between the parties after the time of purchase may be a relevant factor. | Detailed Reasoning - Application to your circumstances: In 20XX Person B wanted to buy a new home, they did not have enough savings to finance a home loan, and you agreed to go as guarantor and use a property solely owned by yourself as collateral to help Person B purchase the property However when Person B went to the bank to apply for the home loan, the bank was not willing to give Person B a home loan without you being included in both the loan application and the property title. You agreed to this on a promise from Person B that they would refinance the home loan in their name solely before the end of 20XX You and Person B purchased the property for $XXX,XXX and signed the purchase contract for the property on DDMMYY Person B uses the property as their main residence and pays for the expenses in relation to the property You have advised that once Person B refinances the home loan and has it in their name only, you will then gift your 50% ownership interest to them. Documentation provided to support that the property was purchased for Person B are inconclusive. There is no evidence of an intention at the time of purchase that Person B would be the sole equitable/beneficial owner of the property and is insufficient to demonstrate an express trust was created. There is insufficient evidence of a resulting trust. While the bank account statements show B deposited money into the offset account which is in your joint names, the amounts deposited in this account for the repayments of a loan are not contributions to purchase price. Person B contributed an amount towards a deposit on the purchase of the property but the use of your own property as collateral has more significance. These facts do not support that Person B had a sole beneficial ownership interest in the property when it was acquired. Although there is a parent-child relationship there is insufficient evidence of a resulting trust. Person B contributed a small deposit ($X000) to the purchase price; however this is not sufficient to trigger the presumption of advancement. We note that if there had been evidence of a resulting trust there would be a requirement to consider the facts and evidence provided and, in your circumstances, there is also no documented evidence that would rebut the presumption of advancement. The evidence provided does not indicate that a trust has been created to show that the property was purchased on trust for Person B As you have not provided the Commissioner with sufficient evidence that Person B had a sole equitable ownership of the property when it was acquired, CGT event A1 will occur for you on your disposal of your interest under section 104-10 of the ITAA 1997, with both legal and equitable interest having been held by yourself, at all times. Any capital gain or loss you make from the removal of your names from the property title cannot be disregarded and must be included in your income tax returns in the relevant income year. As the property was held for over 12 months, there is a CGT discount of 50%, which means that you pay tax on half of the net capital gain on that asset.