Private ruling: Capital gains tax
Date of advice: 12 May 2022
Published: August 2022
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Did you have a CGT event A1 arising from the transfer of title of the property? | 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 you were the legal owner of the property, 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 time of change of ownership, that is, when your name was removed from the property title, that no change of beneficial ownership occurred. You did not have a CGT event A1 or any other CGT event occur when your name was removed from the title.

Relevant facts and circumstances: You wanted to help a family member out of renting and into their own home. There was a verbal agreement between you and the family member that if a property became available to purchase that was cheap enough, you would lend them the money to acquire the property and later, when they were in a position to obtain sufficient finance, they would pay you back. A cheap property came up for auction. On the day of the auction, you were the successful bidder. When it came time to fill out the details on the sales contract and pay the deposit, you were advised that your family member could not be listed on the sales contract as the purchaser as you were the registered bidder. Settlement took place and after some initial cleaning up of the property and repairs, the family member moved in. Some further renovations were undertaken after they moved in. You used an existing lending facility to provide the funds needed to purchase the property, and the extra amount required for the initial clean-up, repairs and further renovations (the agreed amount). The family member has paid for all the costs associated with the property (land rates, water, utilities) as well as home and contents insurance and monthly payments to cover the interest accruing on the lending facility. The family member applied for a loan which was approved. The agreed amount you lent them has been paid back to you in full, from the approved loan funds. The land title was transferred from you to the family member. No consideration was paid to you for relinquishing your legal ownership. You never considered the property as belonging to yourself; rather, you were merely acting as a personal financier in the interim until the family member could secure a loan from a financial institution. You never treated the property as an asset of yours, nor did you receive any rent or claim any deductions for expenses associated with the property. The family member has lived in the property ever since they moved in shortly after the auction.

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