ATO Interpretative Decision
ATO ID 2004/54 (Withdrawn)
Income Tax
Capital gains tax: Water rights - share and extraction components of access licence - separate CGT assetsFOI status: may be released
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This ATO ID is withdrawn as it is based on a straight forward application of the law.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
When the taxpayer acquires share and extraction rights through a permanent transfer in accordance with section 71D of the Water Management Act 2000 (NSW) (WMA), are those rights separate CGT assets, as defined in section 108-5 of the Income Tax Assessment Act 1997 (ITAA 1997), from the access licence held by the taxpayer under section 63 of the WMA?
Decision
Yes. When the taxpayer acquires share and extraction rights through a permanent transfer in accordance with section 71D of the WMA, those rights are separate CGT assets, as defined in section 108-5 of the ITAA 1997, from the access licence held by the taxpayer under section 63 of the WMA.
Facts
The taxpayer holds an access licence under section 63 of the WMA. The taxpayer acquires additional share and extraction rights from the holder of another access licence through a permanent transfer in accordance with section 71D of the WMA.
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.
Share and extraction rights pertaining to an access licence under subsection 56(1) of the WMA are legal rights and consequently fall within the definition of a CGT asset in subsection 108-5(1) of the ITAA 1997. Share and extraction rights are also transferable separately from the access licence in accordance with the procedure set out in section 71D of the WMA.
When the taxpayer acquires share and extraction rights through a permanent transfer in accordance with section 71D of the WMA, those rights are separate CGT assets from the taxpayer's access licence. The acquisition times of the access licence under Division 109 of the ITAA 1997 are different and the cost base calculations under Division 110 of the ITAA 1997 will be separate.
Date of decision: 12 January 2004Year of income: Year ended 30 June 2004
Legislative References:
Income Tax Assessment Act 1997
subsection 108-5(2)
subsection 108-5(1)
Division 109
Division 110
subsection 56(1)
section 63
section 71D Related ATO Interpretative Decisions
ATO ID 2003/1128
ATO ID 2004/5
ATO ID 2004/52
ATO ID 2004/53
Keywords
Acquisition of CGT assets
Capital gains tax
CGT assets
Statutory licences
ISSN: 1445-2782
| Date: | Version: | |
| 12 January 2004 | Original statement | |
| You are here | 29 August 2014 | Archived |