Edited version of private advice

Authorisation Number: 1051927830974

Date of advice: 26 November 2021

Ruling

Subject: Beneficial vs legal ownership

Question

Will you have a CGT event upon the sale of the cryptocurrency you purchased on your father's behalf?

Answer

No. Based on the information and evidence provided, it is accepted that the beneficial ownership is different to the legal ownership. In this case, as you are not the beneficial owner of the asset, you will not have a CGT event happen to you. The beneficial owner may have CGT implications upon the disposal of the asset.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

A few years ago you had a conversation with your parent regarding a cryptocurrency you had purchased in a few years prior. Your parent expressed an interest in buying some but had trouble understanding the technical aspects of buying and holding the coins so they asked you to buy them for them.

A few days after that conversation they put their request to buy $XXX worth of the cryptocurrency in writing.

The following week you received $XXX from your parent into your bank account.

At the same time you used $XXX in your cryptocurrency wallet account to purchase an amount of coins at the price of $XXXX plus a fee of $XXXX

Around a month later your parent made another request to buy $XXX worth of the cryptocurrency in writing.

The same day, you received $XXX from your parent into your bank account

The same day, you used $XXX in your cryptocurrency wallet to purchase coins at $XXXX plus a fee of $XXXX (total $XXX)

At this time, in total you held an amount identifiable in your records of coins for them at a cost of $XXXX

Your parent advised Centrelink of the purchases around the same time.

A few years later, your parent asked you to sell about one third of their coins in writing.

You sold the third in two transactions

In the first transaction you sold a small amount of coins at a price of $XXXX for a total of $XXXX minus a fee of $XXXX for a net amount of $XXXX

The second transaction was the following day to sell a larger amount (bringing the total sale from the two transactions to a third) of coins at $XXXX totalling $XXXX minus a fee of $XXXX for a net amount of $XXXX

Total proceeds from the sale of one third of the total coins you hold for your father was $XXXX

Shortly after the sale, you transferred $XXXX to your parent from your account in two transactions, one being $XXXX and the second the amount of $XXXX the following day.

You still hold an amount of coins for your parent in your personal wallet. These are distinguishable from the coins you hold for yourself due to your records showing the amount you purchased with the funds transferred to you from your parent.

You do not receive any benefit or income from holding the coins for your parent.

You have not contributed or received any funds in relation to your parent's coins.

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 106-50