Private ruling: Legal versus equitable ownership
Date of advice: 27 March 2026
Published: 29 June 2026
Ruling period: 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will a CGT event occur for you when your ownership interest, in the property is disposed of? | A1: Yes

Relevant facts and circumstances: Your sibling was diagnosed with profound and ongoing mental health issues in early adulthood. Your sibling is not under a legal disability. You are not their guardian. Your sibling moved to your property after your parent's passing to be closer to support. Your sibling received an inheritance from your parent on their passing. Your sibling purchased a different property that did not have you are on the title; at the time they were in a new relationship and there were concerns about motivations of the partner. Your sibling's relationship subsequently ended. In 20XX your sibling began to prepare to purchase a new property, legal advice was sought regarding protection of assets. You told us that you were very concerned that your sibling's partner had their own disabilities and health problems. This led to legal advice being sought regarding the protection of your sibling's assets. The legal advice recommended you be named on the title of the property being purchased. A trust declaration was not formalised by the lawyer. There was a falling out with the lawyer who provided the legal advice and therefore no documents can be retrieved from this period of time. You and your sibling are both on the property title of the property as tenants in common, with a 50/50 share, this property was purchased in 20XX. Your sibling has made all payments in relation to the property. The property is your sibling and their spouse's main residence. Your sibling has been in this relationship for over 10 years. There were discussions to have you removed from the title some period later. This was not pursued due to stamp duty costs involved. An area underneath the house is rented out through a real estate agent. This rental income has been paid to your sibling. You do not receive any of this income. You do not pay any of the expenses. You do not have any control or provide opinions over this. You have included your share of the property in your Will, and your share is to be gifted to your sibling. This has also been included in your updated Will. You agreed to be on the title in a custodial capacity and out of concern for your sibling. The property is on the market, and you will not receive any of the proceeds from the sale 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 Division 121 | Income Tax Assessment Act 1997 section 121-20 | Income Tax Assessment Act 1997 subsection 121-20(1) | Income Tax Assessment Act 1997 section 121-25 | Income Tax Assessment Act 1997 subsection 121-25(2) Further issues for you to consider | We have limited our private ruling to the questions raised in your application. There may be related issues that you should consider, including: | Rental Income: In accordance with Taxation Ruling TR 93/32 Income tax: rental program - division of net income or loss between co-owners paragraph 5 states that a partnership agreement either oral or in writing dhas no effect on the sharing of income or loss from the property. | Paragraph 6 provides instructions on how the rental income is to be distributed for accounting for taxation purposes. The income/loss from the rental property must be shared according to the legal interest of the owners, except in those very limited circumstances where there is sufficient evidence to establish that the equitable interest is different from the legal title. | You have not provided sufficient evidence to establish the equitable interest is different from the legal title and therefore the income/loss from the rental income of the property should be distributed in accordance with the share of your legal ownership. | You may apply for another private ruling on this or any other matter.

Reasons for decision: Summary: Yes, a capital gains tax (CGT) event A1 will occur when you dispose of your interest in the property. The CGT provisions contained in Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (ITAA 1997) will apply when you dispose of your interest in the property. | Detailed Reasoning - Detailed reasoning: All legislative references are to the Income Tax Assessment Act 1997 unless stated otherwise. Section 102-20 of the ITAA 1997 provides that a capital gain or capital loss results from a CGT event occurring. The most common CGT event, event A1, occurs under section 104-10 of the ITAA 1997 when there is a change in ownership of a CGT asset. Accordingly, when applying the CGT provisions on the sale of property, ownership must be considered. | Detailed Reasoning - Legal and equitable ownership: A person's legal interest in a property is determined by the legal title to that property under the property law legislation in the State or Territory in which the property is situated. In some cases, it is possible for legal ownership to differ from equitable, also known as 'beneficial' ownership. An individual may hold a legal ownership interest in a dwelling for another individual in trust. The Commissioner's position, as stated in paragraphs 41 and 42 of TR 93/32, is that there are extremely limited circumstances where the legal and equitable interests are not the same, and that there is sufficient evidence to establish that the equitable interest is different from the legal title. Although TR 93/32 broadly deals with the division of rental income or loss between co-owners, it outlines the Commissioner's approach to considering whether legal and equitable ownership align. TR 93/32 states that capital gains or losses are divided on the same basis as net income or loss where there is a difference between legal and equitable ownership. As such, the Commissioner requires the same standard of evidence to establish that the beneficial ownership is different to the legal title in any relevant property dealings or transactions. This evidence ordinarily includes: • contemporaneous documentation that clearly shows the parties' intentions at the time the property was purchased, and • documentation that clearly shows that the parties treated the property in accordance with those intentions during the ownership period. Gibbs CJ in Muschinski v. Dodds [1985] HCA 78 ( Muschinski ) explained the relevance of contemporaneous evidence required to establish a trust over property between two parties: Where both transferees have contributed to the purchase money, the intentions of both are material, but where only one has provided the money, it is his or her intention alone that has to be ascertained. The evidence admissible to establish the intention of the real purchaser will comprise "the acts and declarations of the parties before or at the time of the purchase... or so immediately thereafter as to constitute a part of the transaction" ( Charles Marshall Pty. Ltd. v. Grimsley [1956] HCA 28; (1956) 95 CLR 353, at p 365). Heydon J and Crennan J in Byrnes v Kendle [2011] HCA 26 ( Byrnes v Kendle ) confirm that the rules for the construction of contracts apply also to trusts, stating that 'the contractual relationship provides one of the most common bases for the establishment or implication and for the definition of a trust.' (paragraphs 102 & 103). Their honours proceed to relate the paramount importance of retaining written evidence in contractual construction, which therefore applies to determining the establishment of a trust relationship at [104]: For another thing, the same considerations which limit recourse to surrounding circumstances and oral testimony in relation to contracts applies in relation to trusts. In Buttery & Co v Inglis (1877) 5 R 58 Lord Gifford said: "The very purpose of the written contract was to exclude disputes inevitably arising from the lubricity, vagueness, and want of recollection, or want of accurate recollection, of mere oral conversations occurring in the course of negotiations more or less protracted."And three centuries earlier in Countess of Rutland's Case (1604) 5 Co Rep 25b Popham CJ said: "it would be inconvenient, that matters in writing made by advice and on consideration and which finally import the certain truth of the agreement of the parties should be controlled by averment of the parties to be proved by the uncertain testimony of slippery memory." The goal of excluding disputes of this kind from litigation is thwarted by recourse to the same material in order to discover the background, and that is so whether the disputes are about whether a particular contract was created or a particular trust. These common law principles inform the Commissioner's evidentiary requirements for trusts over property. Therefore, for the Commissioner to accept that the equitable interest in a property is different from the legal title it is necessary to provide contemporaneous evidence which demonstrates that a trust has been established between the legal owner/s and the owner/s in equity. In the absence of this evidence, the Commissioner will maintain the position that the property is owned by the person/s registered on the title. | Detailed Reasoning - Evidence/Record Keeping: In complement to the common law principles previously described, there are also statutory record keeping rules for CGT assets, provided in Division 121 of the ITAA 1997. Subsection 121-20(1) ITAA 1997 provides: You must keep records of every act, transaction, event or circumstance that can reasonably be expected to be relevant to working out whether you have made a *capital gain or *capital loss from a CGT event. (It does not matter whether the CGT event has already happened or may happen in the future.) Subsection 121-25(2) ITAA 1997 provides: You must retain them until the end of 5 years after it becomes certain that no CGT event (or no further CGT event) can happen such that the records could reasonably be expected to be relevant to working out whether you have made a capital gain or capital loss from the event. Therefore, you must retain any evidence which may be relevant to whether you have made a capital gain or loss from a CGT event from the time you acquired the asset until the end of 5 years after you dispose of the asset. Furthermore, the record keeping provisions of subsections 121-20(1) and 121-25(2) of the ITAA 1997 require you to keep records of 'every act, transaction, event or circumstance' relevant to whether you made a capital gain or loss on the disposal of the property. The Administrative Review Tribunal's (ART) decision in Nguyen and Commissioner of Taxation (Taxation and business) [2025] ARTA 173 ( Nguyen ) reaffirms that where there is no contemporaneous evidence from the time the property was purchased to prove that the establishment of a trust was contemplated at the time the property was purchased, later statements and declarations may not be held to represent anything more than the taxpayer's recollections of the way a situation existed at a previous point in time. The ART also noted that while writing evidencing a trust is not legally required to be contemporaneous with the transaction that created the trust, a significant lapse of time between the events that occurred at the time of the property and the production of a written document will be strongly influential as to the document's weight in providing any evidence of intention. | Detailed Reasoning - Express Trust: An express trust is one intentionally created by the owner of property to confer a benefit upon another. It is created by express declaration, which can be affected by some agreement or common intention held by the parties to the trust. For an express trust to be created it is necessary that there is certainty of the intention to create a trust, subject matter and the object of the trust. While trusts can be created orally, all State Property Law Acts contain provisions that preclude the creation or transfer of interests in land except if evidenced in writing. | Detailed Reasoning - Resulting or implied trusts: On the purchase of real property, a resulting trust may arise where the legal title that vests in one or more of the parties does not reflect the respective contributions of the parties to the purchase price. A resulting trust arises by operation of law and falls into two broad categories. One such category is where someone purchases property in the name of another ( Calverley v Green 56 ALR 483) ( Calverley v Green ). A trust is presumed in favour of the party providing the purchase money. If an individual purchases and then pays for a property, but legal title is transferred wholly or partly to another person at their direction, the presumption of a resulting trust arises - the property is held in trust for them. The law presumes that the purchaser, as the person providing consideration for the purchase intended to retain the beneficial interest, although the legal interest is in the other's name. The presumption of a resulting trust is rebutted when the intention was to provide control over the asset. | Detailed Reasoning - Establishment of a trust relationship: When a trust is created by declaration the holder of the undivided legal interest in property declares their intention to create a trust over that property (Korda v Australian Executor Trustees (SA) Ltd (2015) 317 ALR 225; [2015] HCA 6). This will often be performed through the execution of a trust deed but may occur without a trust deed being prepared or executed. Conversely, a trust created by settlement is created by vesting property subject to a trust for the benefit of others (Taras Nominees Pty Ltd as Trustee for the Burnley Street Trust v FC of T 2014 ATC). Again, this will often be done by execution of a trust deed but may occur without a trust deed being executed. A declaration and a settlement are not mutually exclusive, and there are many situations where both will occur during the settlement of a trust. For example, the holder of an unencumbered parcel of land may first declare that they hold the land on trust for a particular beneficiary and then settle the property on a trustee. Most trusts created under Australian law are done so deliberately and are formed involving three parties: • the settlor, who creates the trust; • the trustee, who holds the legal interest in the trust property and who administers the trust; and • the beneficiary, who holds the equitable interest in the trust property, who enjoys the trust, but who also acts as an 'enforcer' of the trust, ensuring that the trustee honours the terms of the trust. Trusts that are formed deliberately, or expressly, generally do not have to comply with any requirements as to form. This means they may be created orally. However, all State Property Law Acts contain provisions that preclude the creation or transfer of interests in land except if evidenced in writing. In Queensland this is provided in section 11 of the Property Law Act 1974 (QLD) (the Property Law Act): A declaration of trust respecting any land must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person's will. This requirement is modified by subsection 11(2) of the Property Law Act, which states: This section does not affect the creation or operation of resulting, implied, or constructive trusts. Subsection 11(2) of the Property Law Act consequently permits resulting, implied, or constructive trusts to be created without executing a written declaration of trust over real property. | Detailed Reasoning - Bare trusts: A trust is a bare trust where the trustee has no interest in the trust assets other than that existing by reason of the office of trustee and the holding of the legal title to the assets. In a bare trust the trustee does not have active duties to perform or has ceased to have those duties so that in either case the property is merely awaiting transfer to the beneficiary or to another party at the direction of the beneficiary ( Herdegen & Anor v Federal Commissioner of Taxation 88 ATC 4995; (1988) 84 ALR 271) ( Herdegen ). A trustee cannot make any decisions or have any rights regarding the assets in a bare trust and must deal with the assets strictly at the beneficiary's direction, as the beneficiary remains absolutely entitled to the assets of a bare trust. If a beneficiary is absolutely entitled to a CGT asset as against the trustee of a trust, the CGT provisions apply to an act done by the trustee, as if it were an act done by the beneficiary. | Detailed Reasoning - Intentions of the parties: As considered by Gageler J in Bosanac v Commissioner of Taxation [2022] 275 CLR 37 ( Bosanac ) at [64]: The presumption of a resulting trust is a presumption of fact, functionally akin to a civil onus of proof. The presumption will yield to an actual intention to the contrary found on the balance of probabilities as an inference drawn from the totality of the circumstances of the evidence. The weight to be given to the fact of a contribution having been made to the purchase price in drawing an inference as to actual intention will vary according to the totality of the circumstances of the case. Further, as stated by Gordon and Edelman JJ in Bosanac at [113] in: ...The objective intention of the parties is determined at the time when the trust was purportedly created - here, when the property issue was purchased. Apart from admissions against interest, the only evidence relevant and admissible as to the parties' objective intention is their acts and declarations before or at the time of the transaction or 'so immediately [thereafter] as to constitute a part of the transactions". Subsequent events and conduct are otherwise not admissible. Where there is more than one party that contributed to the purchase price, the intention of all parties is material. ( Calverley v Green 56 ALR 483, at [251]). The Commissioner must therefore determine your objective intentions by reviewing the evidence at, or so immediately thereafter, as to constitute a part of the transaction. This requires the Commissioner to perform a fact-finding search on the evidence available to them. The evidence, however, is not limited to the time of the transaction where the admissions made are against the [advancing] parties' interests. | Detailed Reasoning - Legal and equitable ownership: The Commissioner's starting point is that legal and equitable interests are equivalent unless there is sufficient evidence to demonstrate that the equitable interest varies from legal interest. Furthermore, the statutory CGT record keeping provisions contained in Division 121 of the ITAA 1997 require you to retain records of every act, transaction, event or circumstance that can reasonably be expected to be relevant to working out whether you have made a capital gain or loss from a CGT asset until 5 years after its disposal. You and your sibling are listed on the title as having a 50% share each of the property. Therefore, the starting point is that you both equally share equitable and legal interest in the property. This is the starting point for determining the CGT liabilities for parties | Detailed Reasoning - Evidence and record keeping: In the absence of contemporaneous evidence from the time of the property's purchase, this peripheral evidence is not sufficient to demonstrate that a trust was established over the property when you purchased it in 20XX. Without contemporaneous documentation it is not possible to identify what the terms were, whether any contingencies existed, and what point, if any, your sibling was or would be absolutely entitled to the Property or hold beneficial ownership of the property. You did not retain contemporaneous documentation demonstrating how the property was intended to be managed. You also did not seek legal advice beyond asset protection. As you have not met the statutory record keeping requirements with regards to the property, the declarations and assertions you have made long after the fact and the absence of contemporaneous documentary evidence, are not sufficient for the Commissioner to accept that the legal and equitable interests in the property do not align. | Detailed Reasoning - Was a trust established at the time you purchased the property in 20XX?: You did not register a written declaration of trust over the property at the time you purchased it, therefore, in accordance with the Property Law Act, only a resulting, implied or constructive trust can be affected to vary the equitable ownership from legal title to the property. The property was purchased with cash without a bank loan. The Commissioner acknowledges that you have provided records of transactions transferring money for the purchase of the property and these transactions originated from Jonathan's account. It is therefore considered prima facie the presumption of a resulting trust arises in favour of your sibling for the full purchase price. However, as stated by Gageler J in Bosanac, the presumption will yield to actual intentions between you and your sibling at the time of the purchase. You advised that due to concerns around your sibling's partner who had their own mental health challenges and your sibling's mental condition which left them vulnerable to being exploited you sought legal advice on how to protect their assets, primarily the property. You advised that the solicitor recommended you go on the property title. No details were given as to how this would protect the property from any breakdown. However, the lack of contemporaneous evidence from the time of the Property's purchase results in insufficient information to distinguish between an intention for it to be held on trust, or to provide a right to protect the asset and a domestic arrangement between family members. It is unclear whether you turned your mind to the ownership of the property, who had control over decisions made in relation to the sale of the property or whether your sibling could call for the property to be transferred to them at any time, or upon meeting contingencies. It is the Commissioners opinion that based on your intention, that is; to protect the property from any subsequent relationship breakdown, it is reasonable you sought a degree of control over the property so to prevent your sibling from either; selling the property at the wishes of their partner or, preventing the property from its entirety being brought into family breakdown proceedings. As such, your intention to go on the property title for 50% was a deliberate and purposive decision to protect your sibling's interests. Additionally, the Commissioner observes that your share of the property has been included in both your original and updated Will whereby it will be gifted to your sibling should you pass away before them. It is inconsistent in that where the property was held on trust for your sibling (which the Commissioner does not accept), the property would not form part of your estate as the property would not have been yours in accordance with common trust law principles. The inclusion of the property within your Will indicates, and supports, you have control of your share of the property in that you may direct it via your estate, something that requires you to have control beyond simply holding the property on trust. Therefore, in accordance with the principles in Bosanac, the Commissioner observes that the presumption of the resulting trust in favour of your sibling yields to your actual intentions; demonstrated through both your actions and statements in deliberately going onto the title to protect the property and directing your share of the property via your Wills. The Commissioner also refutes that the property was held by you for your sibling on bare trust. As established in Herdegen, a bare trustee must have no interest in the property other than to transfer legal title of the property into beneficiary's name at their request or otherwise dealt with as per their instructions. The trustee cannot make any decisions, nor does it have any rights regarding the asset. As per paragraphs above, the ability to control the property via protecting it from relationship breakdowns and directing it via your estate is contradictory to the premise of a bare trust. The arrangement insofar is intentional in putting the property outside of your sibling's control by giving you beneficial control to protect them from making decisions where you are concerned it is not in their bests interests or there were concerns of ulterior motives. Were the property held on bare trust, you would have no control over the property, requiring you to adhere to any directions from your sibling even where you believed it was against their interests. The purpose of the arrangement was to allow you to stop your sibling from disposing of their interest in the property in a way that would disadvantage them. Accordingly, the Commissioner could reasonably presume that in the circumstance your sibling sought to sell the property without conversing with you, you would likely have taken actions to prevent or delay its sale until you were otherwise satisfied it was made under their own accord and was in their best interests, being something that would be at odds with a bare trust. The Commissioner therefore considers you did not hold the property on trust for your sibling and that you held beneficial ownership for 50% of the property in accordance with legal title. | Detailed Reasoning - Conclusion: You have not provided sufficient evidence to show that a trust was established conferring equitable ownership of the property upon your sibling at the time it was purchased, nor at any time during your ownership of the property. As such, the Commissioner's position remains that the equitable interest in the property is in alignment with legal title. Accordingly, you are the legal and beneficial owner of 50% of the property and will be required to report the capital gain or loss you incurred when you dispose of the property.