Nguyen and Commissioner of Taxation (Taxation and business) - [2025] ARTA 173

Nguyen and Commissioner of Taxation (Taxation and business) [2025] ARTA 173 (22 January 2025)
Applicant/s: Uyen Nguyen

Respondent: Commissioner of Taxation
Tribunal Number: 2023/8412

Tribunal:General Member C. Willis
Place:Melbourne
Date:22 January 2025

Decision:The Tribunal affirms the decision under review.

.........[SGD].............................................
General Member C. Willis
Catchwords
TAXATION – private rulings – Tribunal’s role in reviewing objection to private ruling – definition of scheme – whether additional information could be considered by Tribunal – capital gain upon disposal of real property – whether there was a declaration of trust – whether an implied trust arose – whether applicant held the beneficial interest in real property – decision affirmed
Legislation
Taxation Administration Act 1953 (Cth), Pt IVC, ss 14ZQ, 14ZVA; Schedule 1, ss 357-105, 357-115, 357-120, 359-5(1), 359-20(2), 359-60, 359-65
Income Tax Assessment Act 1997 (Cth), ss 102-10, 104-10, 104-55, 108-5
Cases
Bosanac v Commissioner of Taxation (2022) 275 CLR 37
Commissioner of Taxation v McMahon (1997) 79 FCR 127
Co-operative Bulk Handling Ltd v Federal Commissioner of Taxation [2010] FCA 508
Cooper Bros Holdings Pty Ltd trading as Triple R Waste Management and Commissioner of Taxation [2013] AATA 99
Kaftaris v Deputy Commissioner of Taxation (2015) 243 FCR 291
Kauter v Hilton (1953) 90 CLR 86
Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62
McGowan & Valentini Trusts [2021] VSC 154
The Public Servant and Commissioner of Taxation [2014] AATA 247
Rosgoe Pty Ltd v Commissioner of Taxation [2015] FCA 1231
TBCL and Federal Commissioner of Taxation [2016] AATA 264
Statement of Reasons
INTRODUCTION

In January 2023 Ms Nguyen (the Applicant) applied to the Commissioner of Taxation (the Respondent) for a private ruling about the capital gains treatment of a sale of a property originally purchased by her parents, the title to which was subsequently transferred into her name.
The Respondent made a private ruling (‘Private Ruling’) to the effect that the Applicant was required to include any capital gain arising from the sale of the property in her assessable income. The Applicant lodged an objection against the Private Ruling which was disallowed by the Respondent (‘Objection Decision’).
The Applicant seeks a review of the Objection Decision by the Tribunal.
As this dispute arises in relation to an objection to a private ruling rather than an assessment, there are limits to the matters that the Tribunal is able to take into account in making its decision on review. These constraints are explained in greater detail below.
BACKGROUND
The nature of this dispute is such that questions relating to fact finding are in contention. For this reason it is necessary to set out factual matters, including extracts from various documents, in greater detail than might ordinarily be required. This background provides an explanation of and context to the issues in dispute.
Applicant’s circumstances
The following events are not in contention, and/or are directly drawn from the ‘T documents’ provided to the Tribunal:[1]
[1] References to T Documents are to the documents filed by the Respondent under section 37 of the former Administrative Appeals Tribunal Act 1975 (Cth), as modified by section 14ZZF of the Taxation Administration Act 1953 (Cth).
·The Applicant’s parents (‘Parents’) purchased a property in the suburb of Richmond, Victoria (the ‘Property’) in 1993.
·At the time of its purchase the Property needed substantial repairs and maintenance, however the Parents did not have sufficient financial resources or borrowing capacity at that time to fund the necessary works on the Property.
·The title to the Property was transferred by the Parents to the Applicant in 2001, for the purposes of the Applicant obtaining the necessary finance for the renovations to the Property. The Applicant obtained a loan in her name (‘Loan’) in or around 2001. The title remained in her name until the Property was sold.
·The Applicant lived in the Property for a period up to around 2001.
·The Parents lived in the Property until the date of their respective deaths. The Parents paid (at least some) expenses, such as utilities and loan repayments, relating to the Property. The Parents’ legal and personal correspondence was addressed to them at the Property.
·The Parents did not pay rent to the Applicant while they were living in the Property.
·The Applicant’s father passed away in 2019 and the Applicant’s mother passed away in early 2021. Neither had a Will at the time of their death.
·The Property was sold to a third party in December 2021.
·The Applicant paid for costs relating to the Property from the time that both of her Parents had passed away until it was sold to the third party.
·The proceeds of sale of the Property, after deduction of costs associated with the sale, were distributed to the Applicant as to 37%, to the Applicant’s brother as to 37% and to the Applicant’s children as to 25%.[2]
[2] It is noted that these percentages do not total 100%.
Ruling and objection processes
The Applicant applied for a private ruling on 10 January 2023.[3] In her ruling application she said that she only became the registered title holder of the Property because of obligations relating to the finance arrangements, and she merely held the title to the Property on trust for her Parents. Therefore, any capital gain arising on the sale of the Property in 2021 should not be included in her assessable income. The ruling application cited private rulings issued to other taxpayers, as well as published guidance of the Respondent and case authority in support of her position.
[3] T3, noting that the date of 10 January 2022 on the application appears to be an error.
The Applicant provided the Respondent with a copy of a letter she had sent to her representative, Mr Patrick Sheehan, dated 22 March 2023 (‘March 2023 Letter’), which read as follows:[4]
Dear Patrick
Re: 96 Highett St, Richmond
As discussed, the mentioned property was gifted to me in 2001 for the purposes of acquiring finance to renovate a dilapidated building. At all times, I was the legal owner in favour of my parents, who had equitable ownership.
Upon the passing of my parents the property was sold, and the proceeds were distributed in accordance with my mother’s wishes, as she was the surviving spouse.
Kind regards
Wendy Nguyen
[4] T5.
The Applicant also provided the Respondent with a statutory declaration signed by her on 4 April 2023, which stated:[5]
[5] T8.
Over two decades ago, my parents transferred the property located at 96 Highett
Street to me for the purpose of obtaining a loan to fund renovations. At that time, I
obtained a loan from ANZ Bank for approximately $200,000, which was used to
pay off the balance owed on the house and to fund the renovation expenses
associated with the property. My parents assumed responsibility for the
repayments of the new loan, and after selling a property in Vietnam, they paid off
a substantial portion of the loan, which they repaid in cash, leaving an outstanding
balance of approximately $40,000. Unfortunately, due to the length of time that
have lapsed, records related to the renovations are no longer available, and the
loan contract cannot be provided by the bank.
During the ownership period my parents paid for most of the occupancy expenses
for the property such as rates and repairs. They typically paid for these expenses
using cash at the post office. This cash was acquired from their pension payments,
which they typically withdrew as a lump sum on pension day.
As there was no official deceased estate, and therefore executor / administrator,
obtaining complete records has been difficult.
After some discussion between the Applicant’s representative and the Respondent,[6] the agreed question for the Private Ruling was ‘Will I be required to declare Capital Gains Tax (CGT) in relation to the sale of the property at 96 Highett Street, Richmond VIC 3121 in my income tax return?’ The Respondent issued the Private Ruling on 24 May 2023 with the answer to the ruling question being ‘Yes’.[7]
[6] T14.
[7] T15.
It is appropriate to set out the entirety of the ‘Relevant facts and circumstances’ of the Private Ruling, as this forms the relevant ‘scheme’ for the purposes of the Private Ruling:
Your parents purchased a property at 96 Highett Street, Richmond VIC 3121 (the property) in 1993.
The property required major repairs and renovations, but your parents did not have sufficient financial stability or borrowing capacity to refinance the property.
The property was gifted to you by your parents in 2001 for the purpose of acquiring finance to renovate the dilapidated dwelling. It was also gifted to you to ensure that upon their death, the proceeds from the sale of the property would be shared in accordance with their wishes.
You resided in the property as your main residence prior to the required changes to the title.
The remaining balance of the loan on the property was absorbed into the new loan you took out which included the cost of the renovations. The renovations were 100% financed through the loan and were finished in approximately 2004.
Your parents assumed responsibility for the repayment of the new loan that was under your name and all other expenses related to the property.
The property has always been considered your parents main residence and was intended to be until their death.
Neither you nor your parents have ever declared rental income or expenses in relation to the property.
Your father passed away in 2019 and later your mother passed away in January 2021. The property was sold in December 2021. Neither of your parents had a Will.
You paid the mortgage and other costs for the property after both parents passed away until the property was sold.
The property was in your name when it was sold and did not form part of your parents deceased estate.
When the property was sold, you and your brother received 37% of the proceeds and your two children received 25% after considering costs incurred to prepare the property for sale.
Note: The transfer of your parents interests in the property to you in 2001 was not an arm's length transaction. You must use the market value at that time to calculate your cost base.
The Private Ruling applied for the financial year ended 30 June 2022. The relevant scheme commenced on 1 July 1992.
Attached to the Notice of Private Ruling were Reasons for decision. Reasons for decision do not form part of the Private Ruling, but further explained the Respondent’s position that:
·The Property had been gifted by the Parents to the Applicant in 2001, at which time the Applicant became the legal owner and title was transferred into her name.
·The Loan was also in the Applicant’s name.
·There was no evidence that beneficial ownership in the Property remained with the Parents.
·There was no evidence to show that the Parents were ‘actually’ paying for expenses relating to the Property, including Loan repayments.
·There was no formal trust deed to alter the position that the Parents held beneficial ownership.[8]
·The Applicant had not provided information to demonstrate the existence of an informal trust.
·The Property was not distributed as part of the deceased estate of either parent.
·The Applicant was the owner of the Property for the purposes of CGT event A1[9] when it was sold in 2021. The Applicant held both legal and beneficial ownership of the Property. As the Property had been held by the Applicant for more than 12 months, a CGT discount of 50% applied.[10]
[8] As the Respondent was arguing that beneficial ownership had transferred from the Parents to the Applicant in 2001, it would seem that this paragraph was intended to mean that there was no trust deed which provided the Parents with beneficial ownership, or retained it for them.
[9] Subsection 104-10(2) of the ITAA 1997.
[10] See Division 115 of the ITAA 1997, and in particular section 115-100.
The statement in the Reasons for decision to the effect that there was no evidence of the Parents paying for expenses relating to the Property, including Loan repayments, appears to be inconsistent with the sixth paragraph of the description of the scheme. In the Private Ruling, the Respondent identifies as a relevant fact or circumstance that the Parents assumed responsibility for the repayment of the loan and other expenses. It is the scheme description that forms the basis of the Private Ruling, rather than the accompanying reasons.[11]
[11] Co-operative Bulk Handling Ltd v Federal Commissioner of Taxation [2010] FCA 508 at [13] per Gilmour J.
The Applicant lodged an objection against the Private Ruling on 29 May 2023.[12] The Applicant pointed to the March 2023 Letter as a declaration of trust sufficient to create an express trust over the Property. Reference was made to stamp duty and conveyancing legislation, as well as case authority, in support of the propositions that a trust over real property could be evidenced at any time provided that it is supported in writing and demonstrates an intention to create a trust.
[12] T16. This correspondence is dated 29 May 2022, which appears to be an error.
The Applicant raised a further ground of objection on 1 June 2023.[13] She disputed the Respondent’s argument that the Property did not form part of the deceased estate of either Parent. The Applicant said that neither Parent had a ‘formal’ deceased estate process and the Property was dealt with in accordance with their wishes.
[13] T17.
The Applicant raised an additional ground of objection on 4 October 2023, which she amended on 3 November 2023. This related to the Private Ruling not expressly stating ‘whether a declaration was supplied in writing which manifested and proved by some writing that a trust exists.’[14] Based on case authority which considered the requirements for a valid declaration of trust, the Applicant viewed this as setting a lower threshold for establishing a trust than a requirement for a ‘formal trust deed.’
[14] T20.
The Respondent’s Objection Decision dated 10 November 2023[15] was as follows:
The capital gains tax provisions apply to you on the sale of [the Property].
As a result, your objection is not allowed.
[15] T21.
In a ‘Reasons for our decision’ statement accompanying the Objection Decision,[16] the Respondent said that it was not satisfied that a trust for the Property existed on behalf of the Parents from 2001. For capital gains tax (CGT) purposes the Applicant was therefore taken to have acquired the Property when legal ownership of the Property was transferred to the Applicant in 2001.
[16] T2.
The Respondent considered the effect of the March 2023 Letter and had regard to the content of the Statutory Declaration. The Respondent did not accept that the March 2023 Letter evidenced an express trust over the Property as this document was not contemporaneous with her acquisition of the Property (having been made after the deaths of the Parents and after the Property had been sold to the third party). Further, the letter stated that the Property was ‘gifted’ to her. The Respondent characterised the March 2023 Letter as a statement of the Applicant’s recollection of events relating to the gifting of the Property.
Similarly, the Respondent did not believe there was sufficient evidence to support the existence of an implied trust over the Property on behalf of the Parents. This included insufficient evidence of the Parents’ contributions to the mortgage payments and other property expenses, or of their wishes relating to any distribution of proceeds from the sale of the Property.
Following receipt of the Objection Decision the Applicant sought a review of the Private Ruling by the Tribunal.[17]
[17] T1, Application to the Tribunal dated 11 November 2023.
A number of submissions and additional correspondence were filed with the Tribunal by the Applicant’s representative, and were referred to during the hearing:
·On 22 January 2024, the Applicant filed her Statement of Facts, Issues and Contentions (SFIC).
·On 26 January 2024, the Applicant filed a further document outlining her position that a bare trust existed over the Property, and updating other matters set out in the SFIC.
·On 21 March 2024, the Applicant provided documents obtained under freedom of information laws relating to the Respondent declining to conduct an in-house facilitation process on the Applicant’s case.
·On 8 April 2024, the Applicant provided an edited version of a private ruling given to another taxpayer, argued to involve similar circumstances to those of the Applicant.
·On 7 May 2024, the Applicant provided a further submission on the appropriate ‘scheme’. A further copy of this correspondence appears to have been provided dated 8 May 2024.
·On 3 August 2024, the Applicant filed a copy of a letter sent to the Respondent responding to a letter of the Respondent dated 2 August 2024[18] and supplementing the Applicant’s original submissions of January 2024.
·On 9 October 2024, the Applicant filed further submissions in response to the Respondent’s position and supplementing the Applicant’s original submissions of January 2024.
[18] This letter was not filed with the Tribunal.
The Respondent filed an SFIC on 15 March 2024 and an outline of submissions dated 4 November 2024.
ISSUES AND CONTENTIONS
This matter involves a review of the Respondent’s Objection Decision affirming the Private Ruling. The primary task for the Tribunal is to decide whether the Respondent’s ruling on the way in which a relevant provision applies to the scheme set out in the Private Ruling should not have been made, or should have been made differently.
In this case, a preliminary issue is whether the Tribunal may have regard to additional material or analysis of general law questions to establish the relevant ruling ‘scheme’ to which the taxation law must be applied, or the manner in which the taxation law is applied to the specified scheme.
The Applicant does not necessarily disagree with the Respondent’s application of the CGT provisions of the Income Tax Assessment Act 1997 (Cth) (‘ITAA 1997’) to the scheme as identified in the Private Ruling. However the Applicant disputes whether the scheme was adequately or appropriately set out in the Private Ruling. The Applicant believes that an application of the CGT provisions to what she contends is the proper way of viewing the scheme would result in a different outcome. Broadly, this is because under the Applicant’s view of the scheme, she was a trustee of the Property for her Parents and did not hold the beneficial interest in the Property. Therefore, she was not the person to whom the relevant CGT provision applied.
The Respondent denies that there was any error in specifying the scheme in the Private Ruling, but in any event submits that the Tribunal’s role is limited to reviewing the correctness of the Respondent’s opinion (of the law) to the scheme strictly as identified in the Private Ruling. The Respondent says that the Tribunal must not depart from that scheme, as specified in the Private Ruling, in any respect.
The Applicant contends that the question of whether a trust existed is an opinion on or conclusion of general law, and not a fact or circumstance that the Respondent could determine in defining the relevant scheme. Therefore, the Tribunal can have regard to the March 2023 Letter (and surrounding facts) and re-assess the scheme, such that a different outcome results. The Applicant says that the Respondent used this information in making the Private Ruling and therefore does not believe that this would give rise to a new or different ‘scheme’.
RELEVANT LAW
Application for, objection to and review of a private ruling

An overview of the statutory framework for the making and review of private rulings provides essential context to the question of the scope of the Tribunal’s inquiry in this matter.
Part 5-5 of Schedule 1 to the Taxation Administration Act 1953 (Cth) (‘TAA 1953’) contains the provisions under which the Respondent makes rulings on taxation laws. Division 359 provides for the making of a ‘private ruling’, being a written expression of the way in which the Respondent considers a relevant provision of a taxation law[19] applies or would apply to a taxpayer in relation to a specified ‘scheme’: subsection 359-5(1).
[19] Section 357-55 of Schedule 1 to the TAA 1953 sets out the Acts and regulations which are relevant for rulings.
A private ruling:
·May cover any matter involved in the application of the relevant provision: subsection 359-5(2).
·Must state that it is a private ruling: subsection 359-20(1).
·Must identify the entity to whom it applies and specify the relevant scheme and the relevant provision to which it relates: subsection 359-20(2).
The term ‘scheme’ is defined in section 995-1 of the ITAA 1997 to mean:
(a) any *arrangement; or
(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise’.
An ‘arrangement’ means ‘any arrangement, agreement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable (or intended to be enforceable) by legal proceedings’.
If the Respondent considers that further information is required to make a private ruling, then it must request that the person applying for the ruling give that information to it: subsection 357-105(1). The Respondent may take into account additional information that was provided by the ruling applicant after they made their application for the ruling: section 357-115. If the Respondent considers that the correctness of a private ruling depends on assumptions made about a future event or other matters, the Respondent may make such assumptions as it considers to be most appropriate and must tell the person applying for the ruling which assumptions are made: section 357-110.
A person may object against a private ruling that applies to them, and the ruling is taken to be a ‘taxation decision’ for the purposes of Part IVC of the TAA 1953 (which relates to taxation objections, reviews and appeals): subsections 359-60(1) and (2).
In deciding whether to allow or disallow an objection against a private ruling, the Respondent may consider any additional information that it did not consider when making the original ruling. For information that the rulee does not have, the Respondent must tell the person what the information is and give them a reasonable opportunity to respond before allowing or disallowing the objection. If the additional information is such that the scheme to which the objection application relates is materially different from the scheme to which the ruling related, then the Respondent must request that the person make an application for another private ruling: section 359-65.
Where a person is dissatisfied with a reviewable objection decision[20] of the Respondent, the person may apply to the Tribunal for a review of the decision: subparagraph 14ZZ(1)(a)(ii).
[20] A reviewable objection decision is an objection decision that is not an ‘ineligible income tax remission decision’, not relevant for present purposes: see sections 14ZQ, 14ZS.
Under section 14ZZK, if a person seeks a review of a reviewable objection decision that does not concern an assessment:
·The applicant is limited to the grounds stated in the taxation objection to which the decision relates; and
·The applicant has the burden of proving that the taxation decision concerned should not have been made or should have been made differently.
Assessment of capital gains
A person’s assessable income includes their ‘statutory income.’[21] A net capital gain is one type of statutory income. This amount is determined by identifying any capital gains of the person, then applying relevant capital losses, discount percentages or other specific concessions.[22]
[21] Section 6-10 of the ITAA 1997.
[22] Sections 10-5 and 102-5 of the ITAA 1997.
A person can make a capital gain only where a ‘CGT event’ happens.[23] Division 104 of the ITAA 1997 sets out the various CGT events, as well as rules for working out whether a person has made a capital gain (or capital loss) from a CGT event.
[23] Section 102-20.
Section 104-10 provides that CGT event A1 happens if a person disposes of a CGT asset. Of particular relevance is subsection 104-10(2), which says:
You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership does not occur if you stop being the legal owner of the asset but continue to be its beneficial owner.
The person will make a capital gain from CGT event A1 where the ‘capital proceeds’ from the disposal are more than the ‘cost base’ of the CGT asset: subsection 104-10(4).
CONSIDERATION AND FINDINGS
Scope of Tribunal’s inquiry
The Federal Court has described the roles of the Respondent and the Tribunal in relation to reviews of objections to private rulings as follows:[24]
When making a private ruling the Commissioner does not make findings of fact. He simply identifies facts and then states his opinion about the way in which the relevant tax laws apply to the applicant in relation to those identified facts.
… on a process of review the Tribunal cannot redefine the arrangement. The Tribunal is limited to the facts that constitute the arrangement as identified by the Commissioner in his ruling.
… In making his decision about the private ruling the Commissioner is bound by the facts said by him to constitute the arrangement as identified in the ruling. Nor can the Tribunal travel beyond those facts as identified in the ruling. What the Tribunal does is to “go over again” the objection decision to consider what it thinks should be the proper answer to the question about the way in which the relevant tax law operated on the identified facts constituting the arrangement…
[24] Commissioner of Taxation v McMahon and Another (1997) 79 FCR 127 (‘McMahon’), at page 133 per Lockhart J.
The limitations of the matters that the Tribunal can explore when reviewing an objection decision relating to a private ruling have been further elaborated upon:[25]
‘… the Tribunal cannot make findings of fact in this proceeding. The Tribunal can only consider the stated facts comprising the scheme the subject of the ruling. Furthermore, the Tribunal cannot “redefine” the scheme … the Tribunal is confined by the scheme as it has been described in the ruling and cannot depart from that description in any respect. The Tribunal cannot create its own description of the scheme, elaborate upon or make assumptions about the scheme, nor can the Tribunal add further facts, substitute other facts or otherwise alter the scheme.’
[25] Re Cooper Bros Holdings Pty Ltd trading as Triple Waste Management and Commissioner of Taxation [2013] AATA 99 (‘Cooper Bros’) at [8] per Deputy President Alpins. See also McMahon at pages 149 to 150 per Emmett J. .
Whilst accepting these principles, the Tribunal has previously raised a concern that where the Respondent identified facts and described a scheme in a ‘self-fulfilling’ way, there would be no room left for the Tribunal to provide any other answer on the question of law.[26] There could be a risk of such an outcome in the present case where the description of the ‘scheme’ in the Private Ruling is very concise and does not refer to some material provided by the Applicant during the ruling and objection processes.
[26] The Public Servant and Commissioner of Taxation [2014] AATA 247 (‘The Public Servant’) at [46] to [47] per Senior Member Lazanas (as she then was).
In the Cooper Bros and ThePublic Servant cases, there was a discussion of whether there might be a difference in approach between a private ruling which was a ‘self-contained’ or ‘single relevant’ document and a private ruling which referred to information contained in other documents. In each of those cases the notice of private ruling was self-contained, and any reference to another document (such as a deed) was very specific and narrow, such that recourse could only be had by the Tribunal to the scheme as described in the ruling. It was suggested that if the scheme had been expressed in a way that incorporated other information, the outcome might have been different. Nevertheless, only information that is ‘informative about the facts comprising the scheme’ could be considered.[27]
[27] See the comments of SM Lazanas at paragraphs [47] to [49] in The Public Servant, also discussing Cooper Bros.
In the present case the Private Ruling is also a ‘self-contained’ document. The description of the ‘scheme’ does not reference or incorporate information contained in other documents. It does not reference the March 2023 Letter, although this document was not prepared until after the events relating to the Property occurred and during the ruling application process. The March 2023 Letter recites some facts that were already included by the Respondent within the scheme description (although adds a statement by the Applicant that her Parents had the equitable ownership).
The Applicant's representative, Mr Sheehan, acknowledged the constraints described in the case authorities noted above, and agreed that the Tribunal could not redefine or add new facts to the scheme. However, he submitted that whether a trust had been created, including the question of whether a trust deed or declaration existed, was a matter of general law. It was not a 'fact' or 'circumstance' which the Respondent could have concluded as part of the ruling scheme. Therefore, the Tribunal could 'reassess' the scheme as specified and form an opinion that a trust arose, as a matter of law, without altering or adding to the facts of the scheme.
Mr Sheehan submitted that the Tribunal could determine that a trust declaration existed, which would not be a scheme 'fact' but evidence to confirm that the Applicant was not the relevant taxpayer for the purposes of the Private Ruling. This was relevant to the application of the taxation law, specifically to the operation of CGT event A1 which referred to a change of ownership from ‘you’ to another person. That is, on the Applicant’s view of the scheme, she was not the ‘you’ referred to.
The term ‘scheme’ is defined widely for the purposes of Australian taxation legislation. Although the word ‘fact’ is used in the context of describing particular schemes, including in correspondence setting out decisions of the Respondent (such as notices of private ruling which outline ‘relevant facts and circumstances’), and case authority refers to the identification of facts comprising a scheme, the statutory definition of ‘scheme’ covers a range of elements.
Division 359 requires the Respondent to provide its view on how taxation law would apply to a taxpayer in relation to a specified ‘scheme.’ The Federal Court has said that the Tribunal cannot draw inferences of fact which are at variance with or not found in the description of the scheme.[28] Further, the Tribunal is unable to ‘make good any deficiency in the scheme description’, ‘make assumptions’ or ‘create its own description of the scheme’.[29]
[28] Rosgoe Pty Ltd v Commissioner of Taxation [2015] FCA 1231 at [20] per Logan J.
[29] See Rosgoe Pty Ltd at [15] approving the observations of Gilmour J in Co-operative Bulk Handling and confirming that they apply to the Tribunal.
The statement of the Applicant in the March 2023 Letter that she held the Property ‘in favour of my parents’ can be viewed as a statement of fact, reflecting her recollection of the arrangement with her Parents, rather than an expression of a legal concept. In any event, for the Tribunal to form an ‘opinion of law’ about the existence of a trust, it would still need to find at least some additional basic facts relating to the content and context of the March 2023 Letter which were not contained in the description of the scheme set out in the Private Ruling. For example, Mr Sheehan suggested that the Respondent should not have excluded from the scheme the fact that the March 2023 Letter was received. Rather than merely re-assessing the specified scheme, if the Tribunal were to accept the Applicant’s invitation to provide a view that a declaration of trust existed, the Tribunal would be, if not redefining or altering the scheme, at least elaborating upon or creating its own description of the scheme.
Such a re-assessment on the basis of an opinion that a trust existed would potentially be inconsistent with the statement in the Private Ruling description of the scheme that the Property was ‘gifted’ to the Applicant by the Parents. In both her application for a ruling and the March 2023 Letter the Applicant describes the Property as having been ‘gifted’ to her by her Parents, and the Respondent adopted this wording in the Private Ruling. During the objection process, the Applicant said that her prior use of the term ‘gift’ was intended to reflect the fact that there was no exchange of money with her Parents in relation to the Property, rather than suggesting a ‘true gift’ or transfer of equitable ownership in the sense used in certain case authority.[30] Again, the Tribunal would be required to go beyond the description of the scheme and make additional findings as to the circumstances of the gift to counter the scheme finding or assumption that both legal and equitable ownership passed to the Applicant in 2001.
[30] T18.
This conclusion is consistent with previous decisions of the Tribunal. For example, in The Public Servant, the relevant scheme description contained a statement that a payment was made to the applicant upon cessation of her employment, citing particular clauses of a deed of release between the applicant and her former employer. Other documentation about related legal proceedings existed from which a different characterisation of the payment might be drawn, but were not referred to in the scheme description. With some concern, the Tribunal said that it was left with no alternative but to decide that the payment was in consequence of the termination of employment and not in respect of personal injury, and the taxation law had to be applied on this basis.[31]
[31] The Public Servant, at [64] to [69] per SM Lazanas, noting the observations at [72] that the additional documentation was produced at the objection stage and the potential for the Commissioner to have advised the applicant to apply for a new ruling based on a different scheme.
The Tribunal has also previously declined to consider additional information referring to ‘assertions’ about matters such as the nature of a relationship where those assertions are not found in the scheme description set out in a private ruling, on the basis that this would ‘travel beyond’ the facts identified in the ruling.[32]
[32] TBCL and Federal Commissioner of Taxation [2016] AATA 264 at [44] per Deputy President McDermott.
The Tribunal is therefore unable to reassess the scheme in the manner proposed by the Applicant.
Existence of a trust
The Respondent submitted that the Tribunal did not need to have regard to the evidence of the Applicant relating to the existence of a trust. For the reasons given above, the Tribunal is unable to make a finding as to whether a trust existed or not. At the hearing I decided that it was appropriate to hear submissions from the Applicant’s representative in relation to what material the Applicant offered in support of a trust arrangement, not only as a matter of procedural fairness but because these submissions overlapped with the preliminary question of the extent of the Tribunal’s powers of review in this matter.
However, even if I was wrong to reject the Applicant’s submissions about the Tribunal’s ability to make a finding on a question of general law and re-assess the specified scheme accordingly, my view is that the Applicant would have faced significant difficulty proving the existence of a trust over the Property, whether by declaration as an express trust or otherwise as an implied trust.
The Applicant could only provide very limited documentation about the arrangements with her Parents in relation to the Property, and the majority of this material was not contemporaneous with the relevant events.[33] This is perhaps understandable noting the elapse of a number of years between the activities relating to the purchase, financing and renovation of the Property and the date of applying for the Private Ruling, together with the context of private arrangements involving close family which the parties might not have thought they needed to document formally. Mr Sheehan noted that the family were from a non-English speaking background. The Applicant’s father also had some cognitive impairment in his later years. The Tribunal is not suggesting that the Applicant has been untruthful. However, the burden of proof rests with an applicant to demonstrate that the Respondent’s decision should not have been made or should have been made differently.
[33] There were some documents provided by the Applicant during the ruling process, such as utilities bills for the Property in the name of the Parents and copies of legal correspondence addressed to the Parents at the Property: see T10 to T13.
As the Tribunal is not required to make a finding or decision on the existence of a trust, it is not necessary to canvass in detail the lengthy submissions provided by the parties on a substantial number of case authorities and legislative provisions relating to express and implied trusts. However, the following observations can be made.
Both parties agreed that the ‘three certainties of intention, subject and object’ must be satisfied before a finding of an express trust can be made.[34] Both parties cited the same authorities in support of their position in relation to the question of whether the Applicant had demonstrated certainty of intention. Absent an explicit declaration of an intention to create a trust, a court may look at language used in documents or verbal dealings or the conduct of the parties, but there must still be the necessary certainty of intention.[35]
[34] Bosanac v Commissioner of Taxation (2022) 275 CLR 37 (‘Bosanac’) at [108] per Gordon and Edelman JJ.
[35] Kaftaris v Deputy Commissioner of Taxation (2015) 243 FCR 291 at [26] to [27] per Davies J, Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62 at [5] per French CJ.
Although the preparation of a formal trust deed containing a specific form of wording might not be required, the March 2023 Letter falls short of evidencing a ‘clear’ or certain[36] intention to constitute a trust. The March 2023 Letter was written by the Applicant to her advisor more than 20 years after the relevant acquisition and comprises three sentences. The first sentence states that the Property was gifted to the Applicant and explains why this was done (for the purposes of obtaining finance for renovations). The second sentence is a simple statement by the Applicant of her contention that she held the legal title for her Parents who had the equitable ownership. The third sentence is a statement confirming that the Property was subsequently sold and the proceeds distributed in accordance with what the Applicant believed was her late mother’s wishes. It is not clear from this when the Applicant turned her mind to the question of the beneficial ownership of the Property, whether it was intended that a trust arrangement would exist or whether the informal nature of arrangements within the family required subsequent consideration.
[36] Kauter v Hilton (1953) 90 CLR 86 at pages 97 to 98 per Dixon CJ, Williams J and Fullagar J, also Korda.

The Applicant’s statements that the Parents had lived in the Property until their death, and covered expenses relating to the Property were also offered as evidence of an intention to create a trust.[37] The circumstances of parents residing in a house owned by their child, paying for utilities and having correspondence sent to the house could be explained on bases other than a trust existing in favour of the parents. There was some limited historic documentation provided by the Applicant, such as a 2013 bank statement for the Loan account in the Applicant’s name which shows deposits into and withdrawals from the account by one or more individuals who appear to be members of the Applicant’s family.[38] There was a copy of a gas account dated April 2021 and addressed to the Applicant’s father at the Property.[39] Again, even if it is accepted that the Parents met expenses relating to the Property,[40] this does not demonstrate a clear intention to create a trust.
[37] The Applicant cited McGowan & Valentini Trusts [2021] VSC 154 in support of the proposition that a declaration of trust may be proved by other evidence: see [68] to [69] per Macaulay J.
[38] T12.
[39] T13. This gas bill was dated two years after the father’s death.
[40] As previously noted, the scheme described by the Respondent in the Private Ruling states that the Parents assumed responsibility for loan repayments and other expenses relating to the Property.
The Applicant cited the decision of the High Court in Bosanac in support of the contention that there was a presumption of a resulting trust arising from the fact that the Applicant did not pay any money to the Parents for the Property and the statement of the Applicant that the intention was for her to hold the legal title to facilitate finance for the renovations to the Property.[41] This presumption can be rebutted by evidence of the actual intention of the person providing the purchase money. However, the presumption of advancement, which applies to transfers of property within certain relationships such as from parent to child, may also provide an inference as to intention, or a circumstance which may rebut the presumption of a resulting trust.[42] The strength of the presumptions in any particular case will depend on the overall evidence available as to intention.[43]
[41] Bosanac v Commissioner of Taxation (2022) 275 CLR 37, at [12] per Kiefel CJ and Gleeson J.
[42] Ibid, at [13] to [15]. See also Nelson v Nelson (1995) 184 CLR 538.
[43] Ibid, at [21] and [66] to [67] per Gageler J.
The details of the arrangements between family members for the financing of the mortgage and repairs on the Property are not supported by clear documentation or other evidence. There is no reference to the basis upon which the Applicant determined the distribution of sale proceeds to herself and other family members. Although it is correct that the writing evidencing a trust does not need to be contemporaneous with the transaction that created the trust, in this case, the significant elapse of time between the events which the Applicant said gave rise to a trust and the March 2023 Letter is a relevant matter when having regard to the overall evidence of intention. Together with the brief and high level content of the March 2023 Letter and the limited material otherwise supporting the Applicant’s contentions, it would be difficult to support a finding that a trust arose.
In summary, the March 2023 Letter, whether by itself or together with the Statutory Declaration and other statements made by the Applicant of the surrounding circumstances, would not have provided a sufficient basis for establishing the existence of a trust, either as a declaration of an express trust or as evidence of an implied trust.
Other public guidance of the Respondent
The Applicant’s representative drew the attention of the Tribunal to private rulings given to other taxpayers which he believed were aligned to the Applicant’s submissions, or were inconsistent with the position taken by the Respondent in the Private Ruling and Objection Decision in relation to the finding of a trust arrangement. A private ruling only applies to, and can only bind the Respondent in relation to, the taxpayer and scheme specified in the particular private ruling.[44] Edited versions of private rulings are published by the Respondent, but may not include details of factual or other matters which may provide a basis for distinction from the circumstances of other taxpayers. The Tribunal is unable to rely on these other private rulings (or summaries of rulings) in reaching a decision in this matter.
[44] As per subsection 359-5(1) of Schedule 1 to the TAA 1953.
Mr Sheehan also submitted that the Respondent should treat the Applicant’s circumstances in a manner consistent with certain Taxation Determinations and other guidance[45] published by the Respondent. As Taxation Determinations are public rulings, they are binding on the Respondent, but only in respect of an entity to which the ruling applies, which means the entity’s circumstances must come within the circumstances addressed in the ruling.[46] Even if the Applicant was not submitting that the Taxation Determinations were formally binding on the Respondent in this case, the broader relevance of the references was not clear as they applied to very different factual circumstances to those of the Applicant or to different statutory provisions. Again, the role of the Tribunal is to consider how it believes the relevant taxation laws apply to the specified scheme set out in the Private Ruling.
[45] See Taxation Determinations TD2019/14, TD2012/21, TD2017/11, TD 2022/11 and the 2022 ATO Rental Properties Guide.
[46] See Taxation Ruling TR2006/10.
Was the Private Ruling correct?
For the purposes of applying the CGT provisions, it is not disputed that:
·The Property was an ‘asset’ to which the CGT rules applied.
·The sale of the Property to the third party in December 2021 was a disposal of the Property such that CGT event A1 occurred.
The dispute in this matter related to whether the Applicant was the person who is treated as having disposed of the Property in 2021 for CGT purposes. For the reasons given above, the CGT provisions are to be applied to a scheme under which the Applicant became the legal and beneficial owner of the Property in 2001, when the Property was transferred to her by her Parents.
The wording of the question in the Private Ruling is perhaps unusual. As a technical matter, a taxpayer may be required to include a net capital gain in their assessable income, rather than ‘declare capital gains tax (CGT)’. The CGT provisions are found within the ITAA 1997 and do not establish a separate tax.[47]
[47] The Objection Decision clarified this as the Applicant being liable for any capital gain arising in relation to the sale of the Property and being required to declare the relevant CGT event in her income tax return.
For the reasons set out above, the Tribunal agrees with the Respondent that the Applicant acquired the legal and beneficial interest in the Property from her Parents, and had not held the Property on trust for them. Therefore, in applying the CGT provisions, at the time of the disposal of the Property to the third party, there was a change in ownership from the Applicant to the third party, such that the Applicant is taken to have disposed of the Property for the purposes of CGT event A1.
Accordingly, any capital gain arising from this CGT event happening would be included in the assessable income of the Applicant.
Other matters
In her SFIC and other submissions to the Tribunal, the Applicant raised a number of additional matters relating to the fairness of the manner in which the Respondent dealt with her private ruling and objection processes. At the beginning of the hearing Mr Sheehan advised the Tribunal that the Applicant did not wish to pursue these matters further, at least in the current proceeding. Accordingly, the Tribunal has not considered those matters in reaching its decision.
Reference was made in the Applicant’s SFIC to the ‘main residence’ exemption which may operate to disregard certain capital gains where the CGT asset involved is the main residence of the taxpayer.[48] The application of the main residence exemption was not considered in the Private Ruling or Objection Decision. Submissions were provided by the Respondent as to why the main residence exemption was not applicable to the Applicant, however, at the hearing the Applicant’s representative clarified that the Applicant was not seeking a review of this exemption but had raised the provisions as context to her wider contentions. The Tribunal does not need to comment on this exemption any further.
[48] Per section 118-110 of the ITAA 1997.
CONCLUSION
The decision under review is affirmed.

Date of hearing:

22 November 2024

Advocate for the Applicant

Mr Patrick Sheehan

Counsel for the Respondent

Mr Mark Gioskos

Date of hearing:	22 November 2024
Advocate for the Applicant	Mr Patrick Sheehan
Counsel for the Respondent	Mr Mark Gioskos