Private ruling: Disposal of property
Date of advice: 27 October 2025
Published: 15 December 2025
Ruling period: 30 June 20XX
Date scheme commenced: DDMMYY

Ruling: Q1: Am I liable for a CGT event A1 for the property when it was sold, even though I did not receive any of the sales proceeds? | A1: Yes

Relevant facts and circumstances: In 20YY Person A wanted to purchase a property and was unable to obtain a home loan You were asked to go as guarantor on the loan using your income to secure the loan You were included on the loan application and then included on the property title as owning equal share as joint tenants On DDMMYY the property was purchased Person A moved into the property and has treated it as their main residence until it was sold on DDMMYY You never resided in the property You have not contributed to the mortgage repayments You have not contributed to any of the properties upkeep You did not receive any of the proceeds from the sale of the property

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 | Income Tax Assessment Act 1997 subsection 121-20(1) | Income Tax Assessment Act 1997 subsection 121-25(2)

Reasons for decision: Summary: Section 102-20 provides that you make a capital gain or loss as a result of a CGT event, event A1, occurring to a CGT asset in which you have an ownership interest. For this reason, it is important to establish who is the owner of a CGT asset at the time a CGT event occurs, although legal and beneficial ownership are generally identical, there are some situations this may differ. | Detailed Reasoning - Legal and Equitable 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 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. Although TR 93/32 broadly deals with the division of rental income or loss between co-owners, it outlines the Commissioner's approach to considering whether legal and equitable ownership align. TR 93/32 states that capital gains or losses are divided on the same basis as net income or loss where there is a difference between legal and equitable ownership. As such, the Commissioner requires the same standard of evidence to establish that the beneficial ownership is different to the legal title in any relevant property dealings or transactions. This evidence ordinarily includes: • contemporaneous documentation that clearly shows the parties' intentions at the time the property was purchased, and • documentation that clearly shows that the parties treated the property in accordance with those intentions during the ownership period. | 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. Jacobs' Law of Trusts in Australia provides the certainty of intention to create a trust. 'A court cannot hold that an express trust exists unless it is satisfied that there was the intention to create such a trust. The question will be whether there is language or conduct which shows a sufficiently clear intention to create such a trust. No formal or technical words are required; any apt expression of intention will do. The conclusion that the intention existed may be drawn as an inference from the available evidence. If the inference to be drawn is that the parties intended to create or protect an interest in a third party, and the trust relationship is the appropriate means of creating or protecting that interest or of giving effect to the intention, then an intention to create a trust may be inferred. It is not necessary that the creator of the trust should know that the particular relationship intended to be created is in law a trust. A trust will be created, whether or not the creator is aware of it, provided that in substance the creator's actions have the legal effect of creating the relationship which is known in law as a trust. If the language manifests an intention to create that legal effect, then a trust will be created whether the words 'trust' or 'trustee' are used, or not.' | 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 from parents to their children. | Detailed Reasoning - CGT - A1 event - disposal of property: A1 - Disposal of a CGT asset - When the disposal contract is entered into or, if none, when the entity stops being the asset's owner - The capital proceeds from disposal less the asset's cost base - The asset's reduced cost base less the capital proceeds Types of capital proceeds Capital proceeds are what you receive, or are entitled to receive, from a capital gains tax (CGT) event, such as selling an asset. For most CGT events your capital proceeds will be money. They can also be the value of any property you receive or are entitled to receive. If you receive: • foreign currency - work out the capital proceeds by converting it to Australian currency at the time of the CGT event • property (including shares) subject to a deed of escrow - your capital proceeds include the market value of the property at the time of the CGT event (a deed of escrow imposes a restriction on dealing in that property). If you give away or sell an asset for less than it's worth, your capital proceeds equal the market value of the asset. Market value substitution If you receive nothing in exchange for a CGT asset, you are taken to have received the market value of the asset at the time of the CGT event. This is the market value substitution rule for capital proceeds. You may also be taken to have received the market value if both of the following apply: • what you received was more or less than the market value of the CGT asset • you and the new owner were not dealing with each other at arm's length. You are dealing at 'arm's length' with someone when each party acts independently. This occurs when neither party exercises influence or control over the other in connection with the transaction. The law looks at the relationship between the parties and the quality of the bargaining between them. The market value substitution rule may apply when transferring property to family or friends. | Detailed Reasoning - Application to your circumstances: As stated by Gordan and Edelman JJ in Bosanac v Commissioner of Taxation (2022) 275 CLR 37 at [113]: '...the objective intention of the parties is determined at the time when the trust was purportedly created - here, when the property in issue was purchased... the only evidence relevant and admissible as to the parties' objective intention is their acts and declarations before or at the time of the transaction or "so immediately [thereafter] as to constitute a part of the transaction.' The Commissioner therefore must determine your objective intentions by reviewing the evidence at, or so immediately thereafter, the purchase of the property so to constitute part of the transaction. At the time of purchase while you were only there to help support Person A to get the loan, a decision was made to have you become a loan applicant with equal shares in the entire property. You have been unable to obtain any contemporaneous documentation relating to the purchase of the property which could demonstrate your intentions at the time. As co-borrower on the loan you equally contributed to the purchase price of the property and not only obtained a legal interest but also an equitable ownership interest. Regardless of who made the mortgage repayments, the repayments do not represent a component of the purchase price (Calverley v Green (1984) 155 CLR 242, at [257]). Mortgage payments can be relevant, but only as peripheral context which supports a broader set of facts including contemporaneous evidence of intentions of the parties at the time of acquiring the property. While you did not receive any of the proceeds of the sale of the property, we consider that the choice to retain (or surrender) the sale proceeds is a private agreement and does not change your entitlement to the proceeds. Furthermore, the record keeping provisions of subsections 121-20(1) and 121-25(2) of the ITAA 1997 require you to keep records of 'every act, transaction, event or circumstance' relevant to whether you made a capital gain or loss on the disposal of the property. Therefore, as you have been unable to provide the Commissioner with sufficient evidence that you did not have an equitable ownership in the property, we consider CGT event A1 occurred for you when the property was sold under section 104-10 of the ITAA 1997, with both legal and equitable interests having been held by you at all times. Any capital gain or loss made on the sale of the property 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. The disposal of a CGT asset (property) even under special circumstance such as your own, (not receiving any financial benefit from the sale of the property), does not change the CGT event or the ownership interest so the CGT cannot be disregarded, and you will need to calculate the CGT using the Market Value Substitution We do not do this calculation for you, if you need help with working out your capital gain you should seek financial advice from tax agent or financial advisor or go to the ATO website How to calculate your CGT QC 104071