Private ruling: Capital Gains Tax - Main Residence
Date of advice: 6 October 2015
Published: November 2015
Ruling period: Year ended 30 June 2015
Date scheme commenced: 1 July 199X

Ruling: Q1: Were you an owner of the property for capital gains tax purposes? | A1: No.

Relevant facts and circumstances: Your parents bought the property at auction with settlement occurring in 199Y. Your first parent was overseas at the time of purchase so you attended the auction, made a successful bid and signed the purchase documents on your first parent's behalf. You were expected to complete the purchase as the eldest child of the family present as part of your family and religious tradition. You and your second parent were included as purchasers on the purchase documents. Your parents paid the full amount of the purchase price for the property. You did not make any financial contributions toward the purchase of the property. Your parents sold the property in June 20XX. The property was your parents' main residence for their entire ownership period. Assumption Your parents did not intend to make you a beneficial owner 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 106-50. | Income Tax Assessment Act 1997 Section 118-110.

Reasons for decision: Summary: You were not an owner of the property for capital gains tax purposes. | Detailed Reasoning - Detailed reasoning: When considering the disposal of your interest in the property, the most important element in the application of the CGT provisions is ownership. It must be determined who is the legal and/or beneficial owner of the property. Generally, the owner of the property is the person(s) registered on the title, but it is possible for legal ownership to differ from beneficial ownership. When a person purchases and pays for a property, but legal title is placed in another person's name, a resulting trust will arise in favour of the contributor of the purchase money. Where a property is purchased in the name of one person and another person makes a direct financial contribution to the purchase, the property is presumed to be held in shares proportionate to the contributions made by each of them. In your case, the property was purchased in your second parent's name and your name in the absence of your first parent. Your parents paid equal shares for the purchase of the property. As your parents contributed the entire amount of the purchase price the property was held jointly by them. Therefore, you were not an owner for capital gains tax purposes. In terms of your first parent's ownership interest, we have determined that you bought the property as Trustee for your parent. As your first parent is the sole beneficiary, this parent is absolutely entitled, so any capital gain or loss made on the sale of this ownership interest is made by them.