Private ruling: CGT - legal vs beneficial ownership
Date of advice: 7 August 2023
Published: 18 September 2023
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Did the sale of the property result in a capital gains tax (CGT) event for you? | A1: No. Having considered your circumstances and the relevant factors relating to your situation, the Commissioner accepts that although you had a legal ownership interest in the property, it was never intended for you to have any beneficial ownership of the property. Therefore, CGT event A1 or any other CGT event did not happen when your legal ownership ended.

Relevant facts and circumstances: At some time after 1985, the deceased organised and paid for the purchase of the property. The deceased's 2 children, you and Child A were named on the title and signed the contract of sale documents. You and Child A did not contribute any funds to purchase the property, or pay any outgoings, bills, or maintenance costs. You and Child A were registered as the legal owners, as the deceased believed it was disadvantageous to purchase the property in their name as they had served time in jail. You and Child A understood that the deceased was the beneficial owner of the property. The deceased lived in the property from settlement until they passed away. Prior to the deceased's death, their defacto moved into the property. The deceased and their defacto did not pay any rent to you and Child A. Just before the deceased passed away the deceased's defacto's child moved into the property to care for their mother. The deceased passed away leaving a will that appointed Child A as executor of the estate. The will recognised you and Child A as the legal owners of the property and stated the deceased's wish to provide their defacto a right to occupy the property. After the deceased's death, you and Child A allowed the deceased's defacto and their daughter to continue living in the property as long as they paid all the property expenses that the deceased had been paying. Later, the deceased's defacto and their daughter moved out. The deceased's defacto moved into aged care. The property was left vacant. Later, you and Child A, as legal owners, sold the property at auction.

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