| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1012971424318
Date of advice: 16 February 2016
Ruling
Subject: Capital gains tax
Question and answer
Are you required to pay capital gains tax on the sale of the property?
No.
This ruling applies for the following period:
Year ending 30 June 2016
The scheme commenced on:
1 July 2015
Relevant facts and circumstances
Your parent purchased a property a number of years ago.
Your parent was unable to obtain the finance to purchase the property and you along with your spouse secured the finance so your parent could make the purchase.
The property was purchased in trust for your parent as evidence by a trust deed.
Your name, your spouse's name and your parents name was on the title deed.
You and your spouse had no financial interest in the property other than the roles as guarantee for the mortgage on the property.
Your parent died and the property was settled within 2 years of the date of their death.
The property was your parent's main residence.
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 118-10
Income Tax Assessment Act 1997 section 118-30
Income Tax Assessment Act 1997 subsection 118-195(1)
Reasons for decision
The capital gains tax (CGT) provisions are contained in Part 3-1 and 3-3 of the Income Tax Assessment Act 1997 (ITAA 1997). CGT is the tax you pay on certain capital gains you make. You make a capital gain or a capital loss when a 'CGT event' happens (section 102-20 of the ITAA 1997). The most common CGT event A1 happens when you dispose of the asset to another party (for example disposal of a dwelling) (section 104-10 of the ITAA 1997).
A capital gain or capital loss you make from a CGT event that happens to your main residence is disregarded if you are an individual and the dwelling was your main residence throughout your ownership period (section 118-110 of the ITAA 1997).
For dwellings other than flats or home units, an ownership interest is a legal or equitable interest in the land, on which the dwelling is erected, or a licence or right to occupy it section 118-130 of the ITAA 1997.
For CGT purposes and in the absence of evidence to the contrary, a property is considered to be owned by the person registered on the title. Evidence to the contrary may include documents that show the registered owner holds the property in trust for someone else.
In general, the CGT provisions place the liability for tax on the legal owner of a CGT asset.
You and your spouse along with your parent were on the title deed of the property.
A trust deed signed by you and your spouse along with your parent is evidence that you and your spouse were holding the property in trust for your parent.
The property was sold within the two year time period set out in subsection 118-195(1) after the date of your parent's death and the property was your parent's main residence.
Therefore any capital gain made on the property is disregarded by you and your spouse.