Private ruling: CGT - Disposal (legal v beneficial ownership)
Date of advice: 17 June 2022
Published: September 2022
Ruling period: Year ended 30 June 2021
Date scheme commenced: 1 July 2020

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 an ownership of 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 a legal owner of the property, it was never intended for you to have any beneficial ownership of the property and it can be reasonably concluded that at time of change of legal ownership of the property, when the property was sold, that no change of beneficial ownership occurred. You did not have a CGT event A1 or any other CGT event occur when the property was sold.

Relevant facts and circumstances: Your parents purchased a property. Your parents are pensioners and were required to obtain finance in which to fund the purchase of the property. You agreed with your parents to have your name on the title of the property to assist them to obtain finance. Without you on the title and the finance application, your parents were not able to purchase the property in their own names. The property was purchased as joint tenants with your parents and your name on the contract and finance application. The property was always used by your parents as their main residence and was never used for investment purposes. The property was never used as your main residence. You did not contribute any money towards the purchase of the property and all fees, interest and principal repayments with respect to the loan secured by the mortgage over the property have been paid by your parents. They have also paid all outgoings, including council rates, body corporate, maintenance expenses, repairs and utility expenses. Your parents sold the property and used the sale proceeds to purchase a new main residence. You did not receive any money, profits or gifts of money from the sale of the property. The sale proceeds were always considered your parent's money.

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