Private ruling: CGT - legal v beneficial ownership
Date of advice: 3 September 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 remove your names from the title of the property? | A1: No.

Relevant facts and circumstances: You purchased a property together with your child. Your child was unable to obtain finance without you being included on the finance and title of the property. The property was always your child's main residence. Although you were a party to the mortgage, you never made any repayments to the loan or contributed any way financially to the purchase or upkeep of the property. You never treated the property as an asset of yours, nor did you receive rent or claim any deductions for expenses associated with the property. You did not claim any first homeowners grant towards the purchase of this property. You now want to remove your name from the title and the loan. There will be no consideration paid to you for relinquishing your legal ownership.

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 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. 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. You did not intend to or obtain rent in respect of your legal ownership and 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 your name is removed from title, that no change of beneficial ownership occurs. You will not have a CGT event A1 or any other CGT event occurring when you remove your names from the title of the property.

This ruling applies for the following periods: