Private ruling: Capital gains tax - disposal of dwelling - no ownership interest
Published: September 2013
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Do you have an ownership interest in the property B? | A1: No. | Q2: Are you liable for capital gain tax (CGT) on the capital gain made on the disposal of the property B? | A2: No.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. After 20 September 1985, your child (child A) moved from one capital city to another capital city and shortly after you also moved to the same capital city. You disposed of your property in a capital city and the proceeds were used to jointly purchase a property (property A) with your child A. The title of the property A was in joint names and both you and your child A established it as your main residence Your child A entered into a relationship and they asked you to move out. X years later your child A purchased a property (property B) solely in their name for you to reside in. There was no formal agreement between you and your child in relation to property B. At the time of purchase of property B you were under the belief that you could have two properties in your name as you are a pensioner. You have been responsible for all costs associated with property B including renovations undertaken. For a government department's purposes you are the owner of property B. Approximately X years ago your child A disposed of property A and moved where they purchased a property in their name. Over time you have become isolated and lonely. Your child B resides in a capital city and they have insisted that property B needs to be disposed of and you need to move back to the same capital city as child B. Property B will be disposed of to enable you to move back to the capital city. You have supplied copies of documentation to support your application and this documentation is to be read with and forms part of your application for the purpose of this ruling.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 104-10 | Income Tax Assessment Act 1997 Section 109-5

Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. The most common event is CGT event, CGT event A1 happens if you dispose of a CGT asset. The time of the event, is when you enter into the contract for the disposal or if there is no contract - when a change of ownership occurs. CGT event A1 will occur when property B is disposed of. | Detailed Reasoning - Ownership interest: You have an ownership interest in a property if: · you have a legal or equitable interest in the land which the dwelling is erected upon, and · you have a right or licence to occupy the dwelling. In the absence to evidence to the contrary, property is considered to be owned by the person(s) registered on the title. (An exception is if the property is held in the name of someone other than the spouse or child of the owner). Evidence may include documents that show that the registered owner holds the property in trust for someone else. In your case, there was no formal agreement between you and your child A with regards to the ownership of property B. Therefore, your child A is the registered owner of property B and as you do not have an ownership interest in property B there are not CGT consequences for you on its disposal.