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Did a CGT Event A1 occur when you disposed of your interest in the Property?

Yes. This ruling applies for the following period : Year ended 30 June 20XX The scheme commenced on: DD MM 20XX

•                     In early 20XX, you purchased a property located in Australia ("the property") •                     The property settled on a notified date. •                     The property is over 2ha. •                     The property was registered solely in your name for the whole of your ownership period. •                     Your parents were initially renting the property and your parents instigated a conversation about you purchasing the property as it had become available to purchase. •                     Your parents were unable to acquire finance to purchase the property due to their unemployment status and age. •                     You entered into a home loan agreement with an Australian Financial Lender to purchase the property solely in your name. •                     Your parents provided you a non-repayable gift to assist with fees and charges. •                     There was no written agreement/arrangement outlining how you would take out the loan, and who would pay the repayments.

•                     Your parents had borne all financial responsibilities in relation to the property, including paying council rates and insurance premiums for the property •                     You stated that your parents paid you an amount each fortnight towards the mortgage payment. •                     You did not include these amounts as rental income on your personal tax returns throughout the ownership period. •                     You did not contribute any personal funds towards the purchase or upkeep of the property, other than the home loan. •                     You claimed your States' first home-owners Grant in relation to the purchase. •                     You did not update your address with relevant State or Federal Government Authorities, such as electoral roll or Dept. of Motor Vehicles (licensing) •                     Your employment at the time was located a large distance away from the property. As such, you stayed with family and friends but would return to the property often for weekends. •                     You supplied the following documents:

-              A letter dated on a particular date from your parents to the lender advising that they were prepared to provide you with a financial non-repayable gift, -              Multiple years of Council rates for the property, addressed to you -              Insurance "Certificates of currency" from 20XX, in your name. -              Bank statements from your parents for a period of time showing $X,XXX payments being made to you. -              Your bank statements for a period showing $X,XXX payments being received from your parent's bank account. -              Home Loan Statements for a period of time -              Statement from your State's Titles Registry showing the property was transferred from you to your mother. •                     Your parent was diagnosed with a medical condition in 20XX and passed away in 20XX. •                     There was no provision made by your parent within his final Will regarding the property's treatment after his passing. •                     As part of your submission, you asked for the loan to be transferred to your parents prior to parent's passing, but your parent was not in favour of this for reasons he only knows.

•                     The mortgage was discharged in May 20XX. •                     On a specified date, the title was transferred from you to your mother.

Income Tax Assessment Act 1997 section 102-20 Income Tax Assessment Act 1997 section 104-10 Income Tax Assessment Act 1997 section 118-130

Section 102-20 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that you make a capital gain or loss as a result of a CGT event occurring to a CGT asset in which you have an ownership interest. For this reason, it is important to establish who is the owner of a CGT asset at the time a CGT event occurs. Under Section 104-10 (2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that you dispose of a CGT asset when you either enter into a contract for its disposal, or where no contract exists, when the change of ownership occurs. Section 104-10 (4) of the ITAA 1997 explains when you will make a capital gain or capital loss from the disposal of your CGT asset. Section 118-130 of the ITAA 1997 states that for a dwelling that you acquire under contract, you have an ownership interest in it from the time when you obtain legal ownership of it until your legal ownership interest in the dwelling ends. Legal and equitable ownership The ATO considers that there are extremely limited circumstances where the legal and equitable interests are not the same and that there is sufficient evidence to establish that the equitable interest is different from the legal title.

A person's legal interest in a property is determined by the legal title to that property under the property law in the State or Territory in which the property is situated. Where it is asserted that the equitable ownership and legal ownership of a property are not the same, there must be evidence to show that the legal owner holds the property in trust for the beneficial owner. Relevant evidence includes contemporaneous information that evidences the intentions of the parties at the time the property was purchased or transferred from one legal owner to another, and evidence of contributions made by the parties towards the purchase price. Taxation Ruling TR 93/32 Income tax: rental property - division of net income or loss between co-owners (TR 93/32) contains guidance on the issues involved where the equitable interest in a property may not follow the legal title.

As stated in TR 93/32 paragraphs 38 to 41, it has been said that if the equitable interest does not follow the legal title, there is some basis for the profit/loss to be distributed on the equitable and not the legal basis. We will assume where taxpayers are related, e.g., husband and wife, that the equitable right is exactly the same as the legal title. Express trust 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 affected by some agreement or common intention held by the parties to the trust. For an express trust to be created it is necessary that there is certainty of the intention to create a trust, subject matter and the object of the trust. While trusts can be created orally, all State Property Law Acts contain provisions that preclude the creation or transfer of interests in land except if evidenced in writing. > Resulting or implied trusts

On the purchase of real property, 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. A resulting trust arises by operation of law and falls into two broad categories. One such category is where someone purchases property in the name of another. As noted by Gibbs CJ, in Calverley v Green [1984] HCA 81 :(Calverley v Green case). A trust is presumed in favour of the party providing the purchase money. If an individual purchases and then pays for a property, but legal title is transferred to another person at their direction, the presumption of a resulting trust arises - the property is held in trust for them. The law presumes that the purchaser, as the person providing consideration for the purchase intended to retain the beneficial interest, although the legal interest is in the others name. The purchase cost of a property may include the actual purchase price of the property ( Calverley v Green (1984) 155 CLR 242, at 257), legal fees, stamp duty and incidentals ( Currie v Hamilton [1984] 1 NSWLR 687, at 691; Ryan v Dries

[2002] NSWCA 3, at [52] and [53]). The purchase cost will not include loan repayments ( Calverley v Green (1984) 155 CLR 242, at 257), or legal fees and bank fees if they are not paid in order to acquire the property ( Calverley v Green (1984) 155 CLR 242, at 257; Sivritas v Sivritas & Anor (2008) 23 VR 349, at 372-373). However, there are instances where this application may not apply, including: •                     where there is evidence of a specific intention to hold beneficial interest in the property for another person who contributed no amount, or a lesser amount, towards the purchase price. •                     where the presumption of advancement applies •                     where a court orders that property is held on trust (not relevant to your circumstances). Presumption of advancement The presumption of advancement is an equitable principle in which a person puts property in the name of another person with whom they have a close familial relationship. The presumption only applies to transfers and purchases made by people who stand in particular relationships, including parents to their children.

Under the presumption of advancement, the property is transferred with the intention of transferring both the beneficial interest in the property as well as the legal title. The parties hold their equitable interests in the property in the same proportions as their legal interests. Application to your circumstances Due to your parents age, they were not in a financial position to apply for a home loan to acquire the property, and you agreed to help them out by applying for a home loan to purchase the property. You applied for your State's First Homeowner Grant, which one of the requirements was that you were required to live in the home for a continuous period (typically 6 months). Based on information provided, this was not completed. Since the property was purchased, your parents lived in the property as their principal place of residence. You visited on weekends to stay. However, there was no written agreement in place specifying how the property was to be purchased and the expenses were to be paid, or to show an intention that your parents would hold the equitable ownership interest in the property.

Your parent, prior to his passing, did not make any provisions in his Will about the property prior to his death. Your parents did not contribute to the purchase price of the property. You stated that they gave you a gift which you applied towards the purchase costs and the remainder of the purchase price was provided through the loan you obtained through your lender. Any contributions your parents made towards mortgage payments do not form part of the purchase price. We note that had a resulting trust arisen, the presumption of advancement would have applied in the absence of any contrary intention. When applying the above facts, you have not provided conclusive evidence that the legal and beneficial interests were different. All of the documents provided support you had both a legal and beneficial ownership in the property from the purchase date. Any capital gain or loss you make from the removal of your name from the property title cannot be disregarded and must be included in your income tax return in the relevant income year. As the property was held for over 12 months, there is a CGT discount of 50%, which means that you pay tax on half of the net capital gain on that asset.