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Edited version of private ruling
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Ruling
Subject: Capital gains tax (CGT) - ownership of a CGT asset
Will you be able to split the capital gains received from the sale of shares with your spouse when the shares were solely in your name?
No.
Relevant facts
You purchased shares in a company.
No dividends or franking credits were received from the ownership of the shares
The shares were purchased by you and remained in your sole ownership until disposal.
The purchase of the shares was funded by a profit generated from the earlier sale of shares purchased by you.
The disposal of the shares led to a capital gain.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 102-20.
Income Tax Assessment Act 1997 Section 104-10.
Reasons for decision
Detailed reasoning
You make a capital gain or capital loss if a CGT event happens. For most CGT events, your capital gain is the difference between your capital proceeds and the cost base of your CGT asset. CGT events are the different types of transactions or events that may result in a capital gain or capital loss. The disposal of shares in triggered CGT event A1.
Taxation ruling 93/92 discusses the division of net income or loss between co-owners of a rental property. The ruling explains that the loss or income from a rental property must be shared according to the legal interest of the owners, except where there is sufficient evidence to establish that the equitable (or beneficial) interest is different from the legal title. This principle also applies to CGT assets.
Paragraphs 38 to 41 of TR 93/32 address the legal and equitable interests issue confirming at paragraph 41 that there are extremely limited circumstances where the tax office will accept that the equitable interest is different from the legal title. Where the taxpayers are related, the Tax Office will assume that the equitable right is exactly the same as the legal title.
In this case, there is no evidence to support your assertion that the shares were purchased jointly; the evidence suggests that the shares were purchased and held solely in your name. As a result, the capital gain on shares will not be able to be split between you and your spouse.
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