Private ruling: Legal vs beneficial ownership
Date of advice: 14 March 2022
Published: May 2022
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 March 20XX

Ruling: Q1: Will you have a capital gains tax event upon the transfer of your interest in the Belmont North property? | A1: No. Based on the facts, the Commissioner accepts that in your circumstances, you are not a beneficial owner of Property A as you have not contributed to its acquisition and have not contributed to its ongoing expenses.

Relevant facts and circumstances: A number of years ago, you were listed on the title for Property A along with your relative. The deposit for the Property A was individually paid by your relative. All the expenses including rates and utilities having been paid by your relative who will continue to occupy the dwelling. More recently, you planned to acquire Property B. Your intention was for you to own and occupy the dwelling at Property B as your main residence, with Property B property solely in your name. You exchanged contracts for Property B and paid a deposit using your own funds. You provided that you and your relative have mutual agreement regarding the ownership of Property B and Property A. Due to the lending policy with the bank, your relative was required to be listed as a co-borrower had to jointly appear on the Property B title for the loan to be approved. You have provided a letter from financing business explaining this requirement of the financier as you had previously assisted relative to purchase a property, all lenders would not allow you to borrow enough in your name solely to purchase Property B. You co-own an investment property with your relative. You and your relative are now considering transferring your legal interests to each other so that you will solely own the Property B, and your relative will solely own Property A.

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