Edited version of private advice

Authorisation Number: 1052120627207

Date of advice: 19 May 2023

Ruling

Subject: Legal and beneficial ownership

Question 1

Are you considered the beneficial owner of the property for capital gains tax (CGT) purposes?

Answer

Yes. CGT event A1 occurs when there is a disposal of an ownership interest in a CGT asset. A CGT event A1 may arise when property is sold. Your child agreed to be the registered legal owner of the property, but without any expectation of having any beneficial ownership of the property. Your child did not live in the property and did not incur any expenses of ownership of the property including the mortgage repayments. Based on the facts, the Commissioner accepts that in your circumstances, you were the beneficial owner of the property.

Question 2

Are you entitled to apply the CGT main residence exemption in accordance with section 118-110 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes. You lived in the property and treated the property as your main residence throughout the ownership period and you did not use the property to produce any assessable income. Therefore, you are entitled to apply the CGT main residence exemption in accordance with section 118-110 of the ITAA 1997.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

In 20XX and 20XX, you were interested in purchasing a property, however you were unemployed and did not believe that you would be able to obtain the finance required to purchase the property.

Your child obtained the finance to purchase the property on your behalf.

In February 20XX, your child purchased the property.

Your child did not ever intend to occupy the property.

You and your ex-spouse contributed approximately $XXXX towards the purchase of the property. The funds were used to enable the settlement and included transfer duty, agent fees, council rates and land tax.

Your child obtained a loan of $XXXX from Bank A to cover the remaining purchase price of the property.

You and your ex-spouse funded all expenses in relation to the property since it was purchased, including council rates, water rates, insurance, and mortgage repayments.

You always treated the property as your own.

You occupied the property from February 20XX until November 20XX when you experienced a relationship breakdown.

In November 20XX, you moved into a rental property.

In 2020, you purchased a retirement home and currently reside there.

Although you were not living at the property, you chose to treat the property as your main residence during this time.

You agreed that upon the sale of the property, you would divide the proceeds evenly amongst yourself and your ex-spouse.

The property was sold in the 20XX-XX income year.

The property was not used to produce assessable income.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 102-20

Income Tax assessment Act 1997 Section 106-50

Income Tax Assessment Act 1997 Section 118-110

Income Tax Assessment Act 1997 Section 118-125

Income Tax Assessment Act 1997 Section 118-135

Income Tax Assessment Act 1997 Section 118-145