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Edited version of private advice
Authorisation Number: 1052268394676
Date of advice: 11 November 2024
Ruling
Subject: CGT - legal v beneficial
Will a capital gains tax (CGT) event occur when you transfer your legal interest in the property to your relative for no consideration?
Answer
No.
Based on the facts, the Commissioner accepts that your legal interest in the property is held on trust for your relative, who obtained full beneficial ownership of the property at the time it was purchased. As you have never had beneficial ownership of the property subsection 104-10(2) of the Income Tax Assessment Act 1997 provides that a CGT event will not occur when you transfer your legal interest in the property to your relative.
For further information, Taxation Ruling TR 93/32 Income tax: rental property - division of net income or loss between co-owners provides guidance on the issues involved when the equitable interest does not follow the legal title.
This ruling applies for the following period:
Year ending in 30 June 20XX
The scheme commenced on:
XX XX XX
Relevant facts and circumstances
Your relative wanted to purchase a property however was unable to obtain finance.
You agreed to go on the title and mortgage solely to allow your relative to obtain finance.
You never received any benefit from the property.
A short time after the property's purchase your relative refinanced and removed you from the mortgage.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-10