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Edited version of private advice
Authorisation Number: 1051603117018
Date of advice: 7 November 2019
Ruling
Subject: Income tax - capital gains tax - beneficial ownership
Question
Did a capital gains tax event occur for you when the property sold?
Answer
No
Having considered your circumstances and the relevant factors, the Commissioner's view is that while you were the legal owner of the property, you are not the beneficial owners. Further information on the definition of a beneficial owner can be found in Taxation Ruling IT 2486 (withdrawn) Income tax : children's savings accounts and Taxation Determination 2017/11 Income tax: who should be assessed to interest on bank accounts?
The beneficial owner is your child. The sale of the property will not result in a capital gains tax event for yourselves as you are not beneficial owners of the property.
This ruling applies for the following period:
Year ended 30 June 2018
The scheme commences on:
1 July 2017
Relevant facts and circumstances
You are spouses.
Your child purchased a residential property.
To enable your child to obtain finance to purchase the property, you placed your names on the title and mortgage documents for the property as tenants in common with three equal shares, giving your child one-third ownership of the property. It was considered that you held the property on Trust for your child.
Your child's family lived in the property, and this was their principal place of residence for the entire ownership period. During ownership, the property was never used to produce assessable income.
Your child paid for all outgoings on the property, such as; rates, maintenance, insurances, electricity and all costs associated with maintaining a residential property. They paid all mortgage payments.
You did not reside in the property.
The property was disposed of and you did not receive any monies from the sale.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-10(2)