Water entitlement reduction or replacement: CGT rollover

You may be able to obtain capital gains tax (CGT) rollover for a water entitlement when you:

  • replace your water entitlement, including by transformation
  • reduce your water entitlements.

Transformation is the process by which an irrigator permanently changes their rights to water against an irrigation infrastructure operator (operator) into a statutory licence held by an entity other than the operator.

If your water entitlement was replaced or reduced between 1 July 2005 and 7 December 2010, you can choose to amend your income tax return for the year you reported the gain. See Water entitlements before 7 December 2010.

What is a water entitlement?

A water entitlement is any legal or equitable right owned by an entity that relates to water, including groundwater. They could be rights to:

  • receive water
  • take water from a water resource
  • have water delivered
  • deliver water.

Examples of water entitlements include:

  • water allocations
  • water use licence
  • rights relating to conveyance of water, such as a conveyance licence
  • irrigation rights
  • contractual right against a third party, such as an operator
  • a statutory licence against a state or territory government
  • a share in a company if it has rights attaching to it that relate to water
  • an interest in a trust or partnership, if the interest has rights to water attached to it.

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    Last modified: 24 Aug 2016QC 24125