The AAT has confirmed that a taxpayer who owned shares 100% in his own name, but transferred registered title to the shares into joint names with his wife, was liable for CGT on the transaction. It did so on the basis of finding that the taxpayer had disposed of a fractional interest in his shares (namely, 50%) and that this triggered CGT event A1. As a result, the taxpayer was assessable on a $20,000 capital gain made on the transfer.
The taxpayer argued, among other things, that he and his wife regarded themselves as joint owners of all that they collectively owned, and that he believed from the outset that in equity and morally, the shares that were transferred were owned “jointly”. He also claimed that he did not make any capital gain because he had not received anything and that if he knew he would be subject to tax on the transfer, he would not have transferred the shares.
However, the AAT found that the tax law did not recognise such sorts of “joint asset ownership” arrangements involving family members and that the transfer otherwise fell squarely within the terms of CGT event A1. It also noted that while CGT roll-over was available on transfer of assets between spouses on marriage breakdown, no CGT roll-over was available in these circumstances.
(AAT Case [2014] AATA 461, Re Murphy and FCT, AAT, Ref No 2014/0263, O’Loughlin SM, 9 July 2014.)
[LTN 131, 10/7/14]