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ATO Interpretative Decision

ATO ID 2003/1128 (Withdrawn)

Income Tax

Capital gains tax: CGT asset - statutory water rights
FOI status: may be released
  • This ATO ID is withdrawn as it is based on a straightforward application of the law and the same principle is contained is ATO ID 2004/53 and ATO ID 2004/54: - a document on the Schedule of Documents containing Precedential ATO Views (Schedule document) is amended or created, which reflects the principles contained in the ATO ID.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is an access licence, which is granted to the taxpayer under section 63 of the Water Management Act 2000 (NSW) (WMA 2000), a CGT asset as defined in section 108-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

Yes. An access licence granted under section 63 of the WMA 2000 is a CGT asset as defined in section 108-5 of the ITAA 1997.

Facts

The taxpayer holds an access licence under section 63 of the WMA 2000.

Reasons for Decision

Subsection 108-5(1) of the ITAA 1997 defines a CGT asset as

(a)
any kind of property; or
(b)
a legal or equitable right that is not property.

Under subsection 56(1) of the WMA 2000, an access licence entitles its holder to take water subject to the specifications applicable to that licence. This entitlement is a statutory right.

Therefore the licence falls within the definition of 'CGT asset' in subsection 108-5(1) of the ITAA 1997.

[Note: The same principle applies to all statutory water rights under the legislation applying in the various Australian States.]

Date of decision:  8 December 2003

Year of income:  Year ended 30 June 2004

Legislative References:
Income Tax Assessment Act 1997
   section 108-5
   subsection 108-5(1)

Water Management Act 2000 (NSW)
   subsection 56(1)
   section 63

Keywords
Capital gains tax
CGT assets
Statutory licences

Business Line:  Private Groups and High Wealth Individuals

Date of publication:  12 December 2003

ISSN: 1445-2782

history
  Date: Version:
  8 December 2003 Original statement
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