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The Full Court of the Federal Court (Perram, Robertson and Pagone JJ) has upheld the decision of Kenny J in Taras Nominees Pty Ltd as Trustee for the Burnley Street Trust v FCT [2014] FCA 1 that CGT events E1 and A1 occurred when the taxpayer transferred land to a company to be held upon trust pursuant to the terms of a joint venture agreement that the taxpayer had entered into with two other parties with a view to the development of that land and other land owned by the other parties.

The Full Court stated, at para 10:

"The combined effect of the trust deed and the joint venture agreement was that upon transfer of the land by Taras to the trustee, Taras ceased to be the only beneficial owner of the land. Its interest was thereafter made 'subject to' the rights of the other beneficiaries to the land. Taras became, as her Honour equitable tenant in common of the Taras land with the other beneficiaries under the trust."

Accordingly, the taxpayer made a capital gain at the date of transfer, notwithstanding that there was no monetary proceeds received at that time.

However, the Full Court held that subject to the taxpayer providing certain confirmations to the Commissioner, the proportion of the development costs incurred by the taxpayer should be added to the cost base of the land for the purpose of calculating the taxpayer's capital gain.

Taras Nominees Pty Ltd as Trustee for the Burnley Street Trust v FCT [2015] FCAFC 4 (Full Federal Court; Perram, Robertson and Pagone JJ; 28 January 2015).



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