Private ruling: Legal vs beneficial ownership
Date of advice: 19 August 2021
Published: November 2021
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will CGT event A1, or another CGT event, happen when you transfer your legal ownership interest in the property to the deceased estates? | A1: No.

Relevant facts and circumstances: You, Person A and Person B purchased a property as tenants in common. You were included on the title as a requirement of Person A and Person B's lender in respect of the purchase of the property. The relevant government authority was satisfied at the time of purchase that the real ownership of the property was held by Person A and Person B for the purposes of the First Home Owner Scheme. You signed a Statutory Declaration when the property was purchased stating that the purchase of the property was purely for Person A and Person B's occupation and you had not made any contributions to the loan repayments nor will you receive any financial benefit from the future sale of the property. Person A and Person B have passed away You now agree that your legal interest in the property be transferred into Person A and Person B's estates in equal shares.

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

Reasons for decision: Summary: CGT event A1 occurs when there is a change in 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. You agreed to be a registered legal owner of the property, but without any expectation of having any elements of beneficial ownership of the property. You were not going to live in the property. You were not intending to and did not incur any expenses of ownership of the property, including mortgage payments. There was no intention for you to benefit from any future sale of the property. 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 you transfer your share of the property to the estates, that no change of beneficial ownership occurs. You will not have a CGT event A1 or any other CGT event occurring when you transfer your interest in the property.

This ruling applies for the following periods: