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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 private advice

Authorisation Number: 1052034241688

Date of advice: 23 September 2022

Ruling

Subject: CGT - transfer of ASX listed investments under will

Question

Is capital gains tax payable in respect of the transfer of the ASX listed investments from the name of Individual A into the names of Individual A, Individual B and Individual C?

Answer

No.

This private ruling applies for the following period:

Year ended 30 June 20YY

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

1.    Individual A and their sibling, Individual D (together "the Siblings"), held investments being real property and a portfolio of ASX shares and listed investments that they managed together (collectively 'the investments').

2.    Individual D died during the income year with a valid Will.

3.    Individual A made a statutory declaration (the Statutory Declaration) that explains:

1.    The share portfolio and real estate assets as attached in Annexure A hereto ("the assets) were owned and managed with my sibling in equal shares as tenants in common in a partnership arrangement.

2.    The acquisition of the assets was contributed in equal shares and any profit and loss were shared equally as evidenced by tax returns of the partnership.

3.    My sibling died during the income year and their 50% interest in the assets were bequeathed to their children, Individual B and Individual C in equal shares...

4.    There are two pieces of real estate identified in the Statutory Declaration (the real estate). These properties are both situated in Queensland. These properties was acquired by Individual A and Individual D around 6 - 7 years ago. They are both registered in their names as tenants in common with each owning a ½ interest in the property.

5.    When Individual D died, the Siblings held ASX listed investments in their joint names (the ASX listed investments). The ASX listed investments were purchased over the last seven years.

6.    There was no formal written agreement between the Siblings regarding the holding of ASX listed investments.

7.    The Statutory Declaration was prepared and executed on the advice of a lawyer and accountant to evidence the ASX listed investments were being held as tenants in common.

8.    The Siblings held a tax file number (TFN) as a partnership and the profits and losses from the real estate and ASX listed investments have been reported to the tax office in a partnership tax return with the profits and losses being shared equally.

9.    The Siblings held a joint bank account into which the income from the investments was deposited.

10.  Probate of Individual D's Will was granted by Supreme Court of Queensland. There was no asset listing required as part of the application for the grant of probate.

11.  Individual D has two living adult children: Individual B and Individual C.

12.  Individual B and Individual C were appointed executors and trustees under Individual D's Will.

13.  Individual D's Will provides:

I GIVE the whole of my real and personal estate whatsoever and wheresoever situate To my Trustee UPON TRUST for such of them my children the said [Individual B] and [Individual C] if they shall be living at the time of my death and if both as tenants in common in equal shares.

14.  Following Individual D's passing, the ASX listed investments that they held together with Individual A were transferred automatically into Individual A's name only by the broker. This did not reflect the wishes in Individual D's Will and was done without consideration or consultation about those wishes. Individual A, B and C were advised that this is because ASX listed shares and investments can only be held in joint names (i.e. not as tenants in common).

15.  On the transfer date, the ASX listed investments were transferred into the names of Individual A, Individual B and Individual C. Individual A, B and C are holding the ASX listed investments in their joint names for their benefit as tenants in common in their respective shares: Individual A has a 50% interest and Individual B and Individual C each have a 25% interest (as per the wishes stated in Individual D's Will). They are intending to continue to hold the shares in this manner to honour Individual D's wishes.

16.  Individual A, B and C have obtained a TFN with respect to the ASX listed investments that they now hold together and will report the profits and losses from this partnership in partnership tax returns.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 102-20

Income Tax Assessment Act 1997 Section 104-10

Income Tax Assessment Act 1997 Division 128

Reasons for Decision

Summary

Capital gains tax is not payable in respect of the transfer of the ASX listed investments from the name of Individual A into the names of Individual A, B and C.

Detailed reasoning

Capital Gains Tax provisions

1.    Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a capital gain or capital loss results from a CGT event happening. The relevant CGT Event to consider in these circumstances is CGT Event A1.

2.    CGT event A1 happens if you dispose of a CGT asset (section 104-10 of the ITAA 1997).

3.    A CGT asset is defined in subsection 108-5(1) as any kind of property or a legal or equitable right that is not property. For avoidance of doubt, subsection 108-5(2) states that the following are CGT assets:

(a)  part of, or an interest in, property or a legal or equitable right that is not property;

(b)  goodwill or an interest in it;

(c)   an interest in an asset of a partnership, and

(d)  an interest in a partnership that is not covered by (c).

4.    Subsection 104-10(2) provides that you dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. A change of ownership does not occur if you stop being the legal owner of the asset but continue to be its beneficial owner. Further, as stated in the note to subsection (2), a change in the trustee of a trust does not constitute a change in the entity that is the trustee of the trust. This means that CGT event A1 will not happen merely because of a change in the trustee.

5.    It is possible for legal ownership of property to differ from beneficial ownership and a person can have a beneficial interest in property that does not constitute beneficial ownership but may itself be a CGT asset.

6.    Triggering CGT event A1 for a disposal of a CGT asset requires a change in beneficial ownership. However, as noted by Jagot J in Ellison v Sandini Pty Ltd [2018] FCAFC 44 at [99] for these purposes:

a "beneficial owner" of an asset has more than a mere proprietary interest in the asset. To be a beneficial owner the person must have rights which a court of equity would enforce involving full dominion over the asset...

7.    Division 128 of the ITAA 1997 deals with the CGT consequences that arise as a result of a death. Under section 128-10 of the ITAA 1997, when a person dies, any capital gain or capital loss from a CGT event that results for a CGT asset the person owned just before dying is disregarded.

8.    Further, subsection 128-15(3) provides that any capital gain or capital loss made by the legal personal representative (LPR) is disregarded if an asset of the estate 'passes' to a beneficiary in accordance with section 128-20 of the ITAA 1997. Relevantly, legal personal representative is defined in subsection 995-1(1) of the ITAA 1997 to means an executor or administrator of an estate of an individual who has died.

9.    The LPR, or beneficiary, is taken to have acquired the asset on the day the deceased died: subsection 128-15(2) of the ITAA 1997.

10.  Subsection 128-15(4) provides a table that sets out modifications to the cost base and reduced cost base of CGT assets in the hands of an LPR or beneficiary of a deceased estate. For a CGT asset acquired by the deceased on or after 20 September 1985 (subject to certain exceptions not presently relevant), the first element of the cost base of the asset is the cost base of the asset for the deceased on the day they died.

11.  The trustee of a testamentary trust (being a trust created under a will or by the operation of statute, such as intestacy laws) is treated in the same manner as the LPR for the purposes of applying Division 128 of the ITAA 1997: ATO Practice Statement Law Administration PS LA 2003/12 Capital gains tax treatment of the trustee of a testamentary trust. As stated in the PSLA:

Broadly stated, the ATO's practice is to not recognise any taxing point in relation to assets owned by a deceased person until they cease to be owned by the beneficiaries named in the will (unless there is an earlier disposal by the legal personal representative or testamentary trustee to a third party or CGT event K3 applies).

12.  Relevantly, an asset 'passes' to a beneficiary of the deceased estate if they become the owner of the asset under the deceased's will (paragraph 128-20(1)(a) of the ITAA 1997).

13.  An asset can 'pass' to a beneficiary within the meaning of section 128-20 of the ITAA 1997 if the beneficiary becomes absolutely entitled to the asset as against a trustee of the estate: TD 2004/3 Income tax: capital gains: does an asset 'pass' to a beneficiary of a deceased estate under section 128-20 of the Income Tax Assessment Act 1997 if the beneficiary becomes absolutely entitled to the asset as against the trustee of the estate?.

14.  Draft Taxation Ruling TR 2004/D25 Income tax: capital gains: meaning of the words 'absolutely entitled to a CGT asset as against the trustee of a trust' as used in Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (TR 2004/D1) explains the Commissioner's view of the circumstances in which a beneficiary of a trust is considered to be absolutely entitled to a CGT asset of a trust as against its trustee. The core principle underpinning the concept of absolute entitlement in the CGT provisions is the ability of a beneficiary, who has a vested and indefeasible interest in the entire trust asset, to call for the asset to be transferred to them or to be transferred at their direction[1]. The most straightforward application of this core principle is one where a single beneficiary has all the interests in the trust asset.[2]

15.  Paragraph 23 of TR 2004/D25 states that if there is more than one beneficiary with interests in the trust asset, then it will usually not be possible for any one beneficiary to call for the asset to be transferred to them or to be transferred at their direction. This is because their entitlement is not to the entire asset.

16.  Paragraph 24 of TR 2004/D25 explains that there is, however, a particular circumstance where such a beneficiary may be considered absolutely entitled to a specific number of the trust assets for CGT purposes. This circumstance is where:

•         the assets are fungible (noting that land or real property is not considered to be a fungible asset);

•         the beneficiary is entitled against the trustee to have their interest in those assets satisfied by a distribution or allocation in their favour of a specific number of them; and

•         there is a very clear understanding on the part of all the relevant parties that the beneficiary is entitled, to the exclusion of the other beneficiaries, to that specific number of the trust's assets.

17.  Example 8 in TR 2004/D25 states:

Example 8: multiple beneficiaries (no absolute entitlement)

169. Augustus settled shares in a listed public company on trust for his two daughters as tenants in common in equal shares.

170. Notwithstanding that the shares may be fungible and that each daughter may be able to demand that her interest be satisfied by a distribution in specie of one half of the number of shares to her, neither daughter is absolutely entitled. The reason is that under the trust it is clear that the settlor intends that each daughter has an interest in each share. Therefore, any capital gain or loss made by the trustee in respect of the shares will be included in the net income of the trust.

Trusts and co-ownership

Trusts

18.  A trust is a relationship that exists when a person/s (trustee) holds property (the trust property) for the benefit of another or others (the beneficiary/ies) where the obligations of the trustee and rights of the beneficiaries in respect of the trust property are enforceable in equity. Trusts may be constructive, resulting or express.

19.  An express trust is one intentionally created by the owner of property in order to confer a benefit upon another. It is created by express declaration, which can be effected by some agreement or common intention held by the parties to the trust. An implied trust arises from "an implied intention manifested by conduct and/or words", even though that intention is not explicit.[3]

20.  A constructive trust is a trust imposed by operation of law, regardless of the intentions of the parties concerned. It applies whenever equity considers it unconscionable for the party holding title to the property in question to deny the interest claimed by another. The existence of a constructive trust is dependent upon the order of the court.

21.  A resulting trust may be presumed where the legal title that vests in one or more of the parties does not reflect the respective contributions of the parties to the purchase price. The legal presumption is that of the fact of a manifest declaration of trust premised on a presumed intention to create a beneficial interest: Edelman J in Anderson v McPherson [No 2] [2012] WASC 19 at [98] and [99].

22.  The presumption of advancement operates on the hypothesis that, because a certain relationship exists between two parties (e.g. husband to wife), a benefit provided by one party to the other at the cost of the first was intended to be provided by way of "advancement"; absent evidence to the contrary, the relationship supplies a reason for why a gift was intended.[4] The dominant Australian approach is that the presumption of advancement is merely "a description of facts where the presumption of a declaration of trust does not arise: Anderson v McPherson [No 2] at [134]-[135] (Edelman J)). There is no general presumption of advancement between siblings: McGregor v Nicol [2003] NSWSC 332 Davies AJ at [4] citing Noack v Noack [1959] VR 137 at [140].

Co-ownership of shares

23.  Co-ownership of property may be as joint tenants or tenants in common at law or in equity. The nature of a joint tenancy is helpfully explained by the Full Court of Appeal in Victoria in Mischel Holdings Pty Ltd (in liq) v Mischel (in his capacity as executor of estate of Mischel) [2013] VSCA 375:

56 Under the general law, there are two principal characteristics of a joint tenancy: (1) the so-called four unities which must be present for the creation of a joint tenancy and (2) the right of survivorship (the jus accrescendi). As Latham CJ put it in Wright v Gibbons:

The interests of each joint tenant in the land held are always the same in respect of possession, interest, title and time. No distinction can be drawn between the interest of any one tenant and that of any other tenant. If one joint tenant dies his interest is extinguished. He falls out, and the interest of the surviving joint tenant or joint tenants is correspondingly enlarged.

57 The right of survivorship is perhaps the best known feature of a joint tenancy: upon the death of one joint tenant, his or her interest in the estate accrues to the surviving joint tenant(s). Accordingly, where a husband and wife hold an estate in land as joint tenants, the death of one spouse means that the survivor automatically becomes the sole owner of the whole of that estate.

58 Unity of possession occurs where each co-owner is as entitled to the possession of the estate as each of the other co-owners. Unity of title is only achieved where each of the co-owners derives his or her title from the same act or instrument. Unity of time means that the interest of each of the co-owners vested at the same time. Unity of interest means that the interest of each of the co-owners must be identical in extent, interest and duration.

59 In York v Stone, Lord Cowper LC, said 'a joint tenancy in equity is an odious thing'.

60 In Meagher, Gummow and Lehane's Equity: Doctrines and Remedies, the authors explain the attitude of equity to joint tenancies as an aspect of the maxim equity is equality. 'The rule is embodied in the principle "equity leans against joint tenancies". Equity considered the incidents of a joint tenancy to be unequal because survivorship unduly favoured the person of longevity'.

61 Either joint tenancy would not be recognised because of the absence of one of the four unities or because there had been some evidence that it was intended that there should not be a joint tenancy. Similarly, a joint tenancy would be considered as having been severed in equity. By severance, joint tenants are considered to be tenants in common.

24.  A tenant in common has a distinct though undivided share in and a right to the whole of the property in common with others; there is no right of survivorship: Nullagine Investments Pty Ltd v. Western Australian Club Inc (1993) 177 CLR 635 per Brennan J at 643-644. In Michaelides v. Commissioner of State Revenue [2016] VSC 256 Ginnane J at [76] cited the following explanation of tenancy in common of Peter Butt, Land Law, (Law Book Co, 6th ed, 2010) 223-4:

Where two or more persons hold land as tenants in common, each has a proportionate interest in the land. Their interests are not identifiable in any physical sense. One cannot say, "This is my physical portion, and that is yours". For this reason, the share of a tenant in common is said to be "undivided" - meaning that, though a distinct share, it has not been physically divided from the other shares. Rather, each has an "aliquot" portion of all those rights that together make up ownership of the whole. Each is "seised" of his or her own share only, not of the whole. In this way, the seisin of the property is distributed amongst them all.

A tenant in common may generally deal with his or her undivided share as he or she wishes - for example, by alienating it in fee simple, granting it for life with remainders over, or devising it. On death intestate, a tenant in common's share descends to the persons entitled to his or her property under the rules governing intestate succession.

25.  In Ford, Austin & Ramsay's Principles of Corporations Law (Updated January 2019), LexisNexis Australia, Chapter 17 'Issue of Shares'. Accessed online at https://advance.lexis.com on 22 August 2022, the circumstances regarding joint ownership of shares in a company is explained as follows:

At common law, shares, like most choses in action, cannot be held in tenancy in common. Consequently several owners of a share cannot be registered otherwise than as joint holders; as far as the company is concerned they are joint holders and if one dies the surviving joint holders benefit by force of the doctrine of survivorship. However, although several persons are joint owners at law, the circumstances may be such that in equity they are tenants in common. In that case on the death of one of them the representatives of the deceased co-owner may claim an equitable interest in the share against the other surviving co-owners, but that is of no concern to the company.

26.  The principle that a chose in action cannot legally be held as tenants in common was called into question and considered by the New South Wales Supreme Court in De Lorenzo v De Lorenzo [2020] NSWCA 351 (per Leeming JA [15]-[35] and White JA at [60]-[70] but it was unnecessary for a conclusion to be reached. The Court confirmed that company shares can be held in equity as tenants in common (per White JA at [60]).

27.  The relevant legal principles relevant to considering the nature of a co-ownership of property are helpfully summarised by Hargrave J in Sacks v Klein [2011] VSC 451 at [25] with reference to the judgement of Gibbs CJ in Delehunt v Carmody (1986) 161 CLR 464. In Sacks v Klein two brothers legally held real property as joint tenants, the property being a residential flat that they held for investment purposes. One of the brothers died and the other brother claimed he held the property as the surviving joint tenant. The Plaintiff was the administrator of the first brother's estate and he sought a declaration from the court that the other brother held the property on trust for himself and the plaintiff (as administrator of the estate of the deceased brother) as tenants in common in equal shares. Hargrave J's summary of the relevant principles (excluding the first being specific to real property) follow:

(2) Unless there is evidence to indicate the transferees held a different intention, equity will follow the law. [Delehunt v Carmody (1986) 161 CLR 464, 471- 472]. However, equity favours tenancies in common as a form of concurrent ownership, 'probably to give effect to the maxim "equity is equality" '. [Ibid, 470]. In equity, even slight circumstances are enough to indicate the parties did not intend to hold property as joint tenants. As stated by Gibbs CJ in Delehunt v Carmody:

...slight circumstances would have been enough to indicate that it was intended that there should not be a joint tenancy. Equity had a dislike for joint tenancies, because their effect was to make the ultimate ownership of the property depend on the chance of survivorship, and, in the words of Snell's Principles of Equity, 28th ed. (1982), at p. 37: 'There is here no equality except, perhaps, an equality of chance.'

(3) Therefore, irrespective of the position on the certificate of title, equity may intervene to impose a tenancy in common.

(4) Prima facie, the provision of purchase money in equal shares is consistent with an intention to hold property as joint tenants. [Ibid, 471]. However, even if the parties provide purchase money in equal shares, equity will presume the parties intended to hold the beneficial interest as tenants in common in circumstances where:

...a mortgage is made to them jointly, or where the persons to whom the property is conveyed acquire it as partners or as participants in a joint undertaking; these are not rigid categories. [Ibid, 471]

(5) The application of the equitable presumption is not confined to formal business structures. As stated by Mandie J in Xenou v Katsaras [(2002) 7 VR 335]:

...The right of survivorship has no place among merchants. A joint business venture or undertaking 'of a more informal kind lacking the system and continuity or pursuit of profit of a business would still give rise to equities leaning towards a tenancy in common of the beneficial interest '.

(6) The equitable presumption may be rebutted by evidence of a common intention by the co-owners to acquire the property as joint tenants. The common intention must be actual and not presumed. [Gissing v Gissing [1971] AC 880, 900F]. If there is ambiguity as to the existence of a common intention:

... the Court very properly leans to the construction which creates a tenancy in common in preference to a joint tenancy. [Wormald v Wooley [1903] 2 Ch 206, 211]

Further, a proved common intention to acquire a property 'as joint tenants' is not conclusive.

(7) The distinguishing characteristic of a tenancy in common is the holding of distinct, yet undivided, shares in land. In contrast, joint tenants have a full unity of interest. If the parties describe their interests in words which suggest distinct shares are to be held, their words prevent the creation of a joint tenancy. In Robertson v Frazer, [(1871) LR 6 Ch A pp 696] Lord Hatherley LC stated that the evidentiary threshold to establish such a division is easily met:

... anything which in the slightest degree indicates an intention to divide the property must be held to abrogate the idea of a joint tenancy and to create a tenancy in common.

28.  Hargrave J at [28 - 29] found that the brothers held the investment property as a joint undertaking (a long term investment for their mutual benefit) and that the equitable presumption of tenancy in common was applicable. Further, although he found that the brothers agreed to be registered as joint tenants (on the evidence) [at 61], he found that the brothers intended to divide the property equally between them and, in equity, that intention prevented the creation of a joint tenancy.

29.  In New South Wales, Queensland, NT and in the ACT, legislation has reversed the historical legal presumption of joint tenancy (including where contributions are equal) unless the transaction under which the parties obtain their interest makes it clear that they are to hold as joint tenants; see Conveyancing Act 1919 (NSW) s 26; Property Law Act 1974 (Qld) s 35; Law of Property (Miscellaneous Provisions) Act 1958 (ACT) s 3: Delehunt v Carmody [1986] HCA 67; Mischel Holdings Pty Ltd v Mischel [2013] VSCA 375; Falloon v Madden; Madden v Madden [2012] NSWSC 652; The Laws of Australia, TLA [28.1.2180] - [28.1.2210] accessed online at www.westlaw.com.au 24 - 25 August 2022.

30.  Ultimately, the question is one of fact as to what the parties intended with respect to their co-ownership at the time of purchase determined by reference to the relevant facts, including inferences appropriately drawn from the facts, and where applicable and not rebutted, presumptions of equity: Commissioner of Taxation v Bosanac [2021] FCAFC 158.

31.  In relation to company shares, it is further noted that Jagot J in Sandini at [148 - 150] expressed doubt that shares could be described as interchangeable, as they may have different cost bases for CGT purposes. It was noted that a trust created over the whole of a fund comprising shares was unlikely to be held by the trustee as bare trustee. Therefore, it is unlikely that there is beneficial ownership of a specific number of shares in the fund as opposed to a beneficial interest in all of the shares in the fund commensurate with their proportionate share.

Queensland Succession Law

32.  In Queensland, a person may dispose of any property by will to which they are entitled at the time of their death[5]. Property means any legal or equitable estate or interest (whether present or future, vested or contingent, or tangible or intangible) in real or personal property of any description (including money), and includes things in action.[6]

33.  In Queensland, all property vests in the executor upon the death of the testator.[7] The interest which vests is the testator's interest to which they were entitled and that did not cease at the time of death.[8]

34.  As the property of the deceased vests in the executor upon death, the trusts over property established in the deceased's will do not become operative until the executor determines that the property is no longer required for the payment of debts and liabilities and legacies of the estate.[9] The process by which this happens is called assent and assent may be express or implied, but must be communicated.[10] The circumstances in which an executor may become trustee, or be both executor and trustee, of assets in the estate, is explained in Jacob's Law of Trusts in Australia, 8th Edition, JD Heydon & MJ Leeming 2016, Chapter 2 at [2-40] accessed online at on 12 September 2022:

If a testator appoints the same person as executor and trustee, which is usual nowadays, then that person acts as executor when performing executorial duties, and thereafter while continuing to hold the property is a trustee. However, if called upon at any future time to deal with assets in the estate which may be subsequently discovered, the person, although a trustee in respect of the balance of the property, will take the new assets as executor. Thus, the same person may be both executor and trustee in respect of different assets in the same estate. Further, if the executor carries out an instruction in the will to set aside a fund and hold it on trust for certain beneficiaries, he or she will become a trustee in respect of that property. An important result of this is that the subject matter of that fund will thereupon cease to be part of the general estate of the testator, and therefore if there is any loss to the subject matter of the fund, that loss will fall on the beneficiaries of the fund, and not upon any other beneficiaries in the testator's estate. This is part of the principle that an executor on assenting to a legacy holds the subject matter of the legacy as trustee for the legatee.

An executor who has performed all executorial functions may become a trustee by merely continuing to hold property. When the executor becomes a trustee of ascertained property, the beneficiaries then become owners of equitable interests in that property. Thus a beneficiary under a will does not, by reason of the will alone, obtain any title, legal or equitable, to any asset forming part of the testator's estate. When a beneficiary does obtain such a title, it is obtained as a result of the administration of the estate of the testator according to law and in accordance with the dispositions of the will.

Application to your circumstances

35.  In this case, applying the relevant principles discussed above to the facts and circumstances, and the relevant presumptions of law and equity as modified by Queensland law, we are satisfied that Individual A and Individual D held the ASX listed investments on trust for their benefit as tenants in common in equity in equal shares.

36.  We are further satisfied that on Individual D's death, Individual A held the ASX listed investments on trust for herself and the executors and trustees of Individual D's estate (Individual B and Individual C) as tenants in common in equal shares.

37.  The beneficial interest that Individual D held in the ASX listed investments at the time of their death that devolved to the executors and trustees on their death would trigger a CGT Event but any capital gain or loss would be disregarded under section 128-10 of the ITAA 1997. When the beneficial interest passes to the beneficiaries of the estate (Individual B and Individual C as tenants in common) any capital gain or loss that they make as LPR is disregarded: section 128-15(2). The LPR and beneficiaries are taken to have acquired the beneficial interest on the day Individual D died: 128-15(2) and the cost base of their beneficial interest will be their share of the cost base of Individual D's interest on the day they died: subsection 128-15(4) of the ITAA 1997.

38.  When the ASX listed investments were legally transferred into the names of Individual A, Individual B and Individual C there was a change in the legal ownership of those assets. However, we accept that those assets were held before the transfer by Individual A beneficially for Individual A and Individual B and C (as executors and trustees of Individual D's estate). Further, pursuant to Individual D's Will, Individual B and C are to hold any of Individual D's personal estate as trustee for themselves as tenants in common in equal shares. Therefore, we conclude that as a result of the transfer on the transfer date, there has been a change of trustee. Instead of Individual A holding those shares beneficially for herself, Individual B and Individual C they are now held by Individual, B and C (as trustees) for their benefit as tenants in common in their respective shares.

39.  As per Division 128 of the ITAA 1997, and having regard to the ATO's practice in PSLA 2003/12, there is no taxing point in respect to an LPR starting to hold the interest in the ASX listed investments as trustee under the Will for the benefit of the beneficiaries (Individual B and C) of Individual D's estate.

40.  Therefore, we conclude that there is no change in beneficial ownership of the ASX listed investments, as a result of the transfer on the transfer date, of the nature required under subsection 104-10(2) of the ITAA 1997 and therefore no CGT Event A1 for that transfer. There are no other relevant CGT events that happened in relation to the transfer on the transfer date and therefore no capital gain that would attract capital gains tax.

Further issues for you to consider

41.  We have ruled that that there is no capital gains tax payable in respect of the transfer of the ASX listed investments from the name of Individual A into the names of Individual A, B and C on the transfer date.

42.  In our view, each of Individual A, B and C have a beneficial interest in each ASX listed investment (either a share or unit) to the extent of their respective shares (Individual A as to 50% and Individual B and C as to 25% each).

43.  Therefore, it is likely that CGT Event A1 will happen if a specific number of the ASX listed investments are transferred into the sole name of one of them so that they have sole ownership of those particular ASX listed investments. The CGT event will be in respect of the transferors' partial interest in those ASX listed investments. Capital gains tax may be payable in those circumstances.


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[1] Paragraph 10 of TR 2004/D25

[2] Paragraph 20 of TR 2004/D25

[3] Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 per Ward CJ in Eq citing Blue J in Carter v Brine [2015] SASC 204 at [303[

[4] Commissioner of Taxation v Bosanac [2021] FCAFC 158 at [3]

[5] Section 8 of the Succession Act 1981 (QLD)

[6] Section 36 and Schedule 1 of the Acts Interpretation Act 1954 (QLD)

[7] Section 45(1) of the Succession Act 1981 (QLD)

[8] Section 45(2) of the Succession Act 1981 (QLD)

[9] Halsbury's Laws of Australia, Last updated: 27 November 2014, Marcus Katter BBus(Man) LLB(Qld) GradDipIL(Syd), at [395-4900] to [395-4910] accessed online at https://advance.lexis.com on 12 September 2022

[10] Ibid