Private ruling: Capital gains tax
Date of advice: 16 February 2021
Published: April 2021
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 16 January 20XX

Ruling: Q1: Did CGT event A1 happen for you on disposal of part of your ownership interest in the property? | A1: Yes Subsection 104-10(1) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that CGT event A1 happens if you dispose of a CGT asset. You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. Under subsection 104-10(3) of the ITAA 1997, the time of the event is when you enter into the contract for the disposal; or if there is no contract - when the change of ownership occurs. On XX January 20XX you executed relevant documents to show your disposal of XX% interest in the property to your spouse. Although land title information was received after this date, it is still accepted the change in ownership occurred on XX January 20XX, therefore you had a CGT event A1 in the 20XX income year.

Relevant facts and circumstances: You and your spouse have ownership interests in the property. The property is a rental property. In December 20XX you engaged lawyers to prepare documents for transfer of part of your ownership interest (XX%) in the property to your spouse. You signed the transfer on XX January 20XX. The new ownership interests became your spouse owning XX% and you owning X%. Further to the confirmation from the state revenue office, lawyers handed over the documents to your broker to be sent to your bank on XX March 20XX. The bank received the documents and didn't register the revised ownership interests with state revenue office due to a breakdown in their process. On XX June 20XX, the property was sold and during the settlement document processing it was uncovered that the ownership structure was not completed by the bank as requested. The bank acted swiftly and got the titles registered to complete the settlement. You and your spouse have been lodging income tax returns since the year ending 20XX based on the new ownership.

Relevant legislative provisions: Section 104-10 of the Income Tax Assessment Act 1997