EV 1052415019657currentnon-binding advice

CGT - legal vs beneficial

Non-binding edited private advice. This is an edited version of private advice the ATO gave to a specific taxpayer about their own circumstances. You cannot rely on it — it is not binding and provides no protection for anyone else (see PS LA 2008/4). Use it as a guide to the ATO’s thinking, not as authority.

1

Will a capital gains tax (CGT) event occur if you transfer the legal ownership of shares to your child?

2

No. CGT event A1 happens when you dispose of a CGT asset. You dispose of a CGT asset if a change of ownership occurs from you to another entity. We consider that your child has always been the sole beneficial owner of the shares, and no CGT event will happen when you transfer the shares to your child. This ruling applies for the following period : Year ending 30 June 20XX The scheme commenced on: XX March 20XX

3

You are parent of X (your child). On XX 20XX, you purchased $X of the X share on X's behalf. The purpose was to contribute toward X's future car or home purchase when they grow up. The shares were purchased in your legal name, however acting in the capacity as trustee for X. All dividend income has been reinvested through a dividend reinvestment plan. The current value of the share account is approximately AUD X. The dividend income has been declared on your income tax return due to your mistake. You intend to transfer to X through an off-market transaction during the ruling periods. You will not receive any consideration on the transfer of the shares to X.

4

Income Tax Assessment Act 1997 Section 102-20 Income Tax Assessment Act 1997 Section 104-10