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Edited version of private advice

Authorisation Number: 1051769589621

Date of advice: 2 November 2020

Ruling

Subject: Rental property - beneficial ownership

Question 1

Is the net rental income or loss from the property to be divided between the owners in accordance with their proportionate ownership interests?

Answer

Yes

Based on the information provided, the equitable owners are different to the legal owner of the property. Individual A, Individual B, Individual C and Individual D as the beneficial owners of the property have contributed to the purchase price of the property and determined their relevant proportionate ownership interests. Accordingly, the net rental income and loss will be divided between them. Further information can be found in Taxation Ruling TR 93/32.

Question 2

Will the owners have a CGT event A1 when the property is disposed of?

Answer

Yes

CGT event A1 happens when you dispose of a CGT asset. The beneficial owner of the CGT asset will be liable to determine the capital gain or loss from the event. We accept the beneficial owners are different to the legal owner. The beneficial owners Individual A, Individual B, Individual C and Individual D have proportionate ownership interests in the property and have since the property was acquired. When the property is disposed of CGT event A1 will occur for the beneficial owners. Further information on a beneficial owner can be found in Taxation Determination TD 2017/11.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

On XX September 20XX the property was acquired with Individual A as the registered owner.

Individual A acquired the property with the common intention that the property would be held beneficially for themselves and others in fixed proportions as follows:

•         Individual A 40/120

•         Individual B 40/120

•         Individual C 20/120; and

•         Individual D 20/120.

Each of the individuals contributed to the purchase price of the property. The contributions were in accordance with the fixed proportions agreed at acquisition date.

At all times the property is being used as a rental residence deriving rental income.

A Co-Ownership Deed was executed between the individuals to record the matters agreed at the time the property was acquired.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 104-10

Income Tax Assessment Act 1997 section 120-20

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