| Disclaimer 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: 1052099818374
Date of advice: 5 April 2023
Ruling
Subject: CGT - legal vs beneficial ownership
Question
Did a capital gains tax (CGT) event happen when you transferred your ownership interest in the property to your child?
Answer
No. Having considered your circumstances and the relevant factors relating to your situation, the Commissioner accepts that although you were the legal owner of the property, it was never intended for you to have any beneficial ownership of the property. Therefore, you will not have a CGT event A1 or any other CGT event occurring when your legal ownership ends.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
At some time after 1985, your child separated from their spouse and sold their marital home. Your child used the profit from the sale of this property to pay the deposit for the purchase of the property.
Upon legal advice from your child's solicitor, you agreed to a joint legal ownership arrangement whereby you owned 70% and your child owned 30% of the property. This was to safeguard against any future claims from your child's ex-spouse. At the time this occurred all parties agreed that financial responsibility for the property and any subsequent gain from the property would solely sit with your child.
You did not contribute financially to the purchase of the property, maintain the property of contribute to any of the mortgage payments.
Your child used the property as their main residence for several years.
Later, your child moved out to their new partner's house and put the property on the rental market. Your child received all rental income and reported the income in their tax return.
Later, you transferred your ownership interest in the property to your child, who entered into a new mortgage solely in their name.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 102-20
Income Tax Assessment Act 1997 section 104-10