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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