Private ruling: Absolute entitlement - capital gains tax
Date of advice: 20 May 2020
Published: June 2020
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: For the purposes of section 106-50 of the Income Tax Assessment Act 1997 (ITAA 1997), was Person A absolutely entitled to the property at all times as against Person B who held the property as trustee? | A1: Yes. At all times Person A was absolutely entitled to the property as against Person B as trustee. Any capital gains tax event that happens upon the sale of the property would happen to Person A. | Q2: Does any capital gains tax event happen to Person B upon the disposal of the property? | A2: No. Because Person A was absolutely entitled to the property at all times as against Person B as trustee, no capital gains tax event will happen to Person B. Any capital gains tax event will happen to Person A. | Q3: Can Person A choose to apply the main residence exemption under section 118-110 of the ITAA 1997 to disregard any capital gain that arose from the disposal of the Property? | A3: Yes. As Person B qualifies for the main residence exemption, they can disregard any capital gain made upon the disposal of the Property.

Relevant facts and circumstances: Person A wished to purchase a main residence. As they were not in a position to borrow sufficient funds, their parent, Person B, offered to purchase the dwelling outright in their name, using their own funds. There was a family arrangement that Person B would property for the benefit of Person A Person A repaid the loan to Person B. Person A paid all the outgoings in respect of the property. Upon the sale of the property, Person A received all the capital proceeds. No proceeds were paid to Person B.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 106-50 | Income Tax Assessment Act 1997 Section 118-110