ATO Interpretative Decision
ATO ID 2004/123
Income Tax
Capital gains tax: time of acquisition of poker machine rightsFOI status: may be released
-
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Did the taxpayer, a hotelier, acquire poker machine rights for the purposes of section 160U of the Income Tax Assessment Act 1936 (ITAA 1936) at the time they were granted in 1997 under the Liquor Act 1982 (NSW) (LA 1982)?
Decision
Yes. The taxpayer acquired the poker machine rights for the purposes of section 160U of the ITAA 1936 at the time they were granted in 1997 under the LA 1982.
Facts
The taxpayer, a hotelier, was granted poker machine rights under the LA 1982 in 1997. The rights were not acquired pursuant to a contract.
The LA 1982 was replaced by the Gaming Machines Act 2001 (NSW) (GMA 2001). The taxpayer's rights under the LA 1982 were carried over to the GMA 2001 as poker machine entitlements. The taxpayer sold the poker machine entitlements in 2003.
Reasons for Decision
Legal rights fall within the definition of 'CGT asset' at subsection 108-5(1) of the Income Tax Assessment Act 1997. This is consistent with the position under paragraph 160A(a) of the ITAA 1936. Poker machine rights are therefore CGT assets.
The rights pertaining to each approved poker machine, kept in a hotel, for which a poker machine entitlement was allocated, were effectively carried over from the LA 1982 to the GMA 2001. This was facilitated by paragraph 15(1)(a) and the savings provisions in Schedule 1 of the GMA 2001.
The poker machine rights created in 1997 under the LA 1982 were covered by subsection 160M(6) of the ITAA 1936 because they were not a form of corporeal property and vested in the taxpayer on their creation. Under paragraph 160M(6B)(a) of the ITAA 1936, the taxpayer acquired those rights at the time applicable under subparagraph 160U(6)(b)(i) of the ITAA 1936.
As a result of the interaction between subparagraph 160U(6)(b)(i) and paragraph 160M(6)(b) of the ITAA 1936, the time that the poker machine rights were acquired was the time at which they were granted to the taxpayer in 1997 under the LA 1982.
Amendment History
| Date of amendment | Part | Comment |
|---|---|---|
| 11 August 2017 | Reasons for Decision | Added Note regarding repeal of Paragraph 15(1)(a) of the GMA 2001. |
| 4 July 2014 | Related ATO Interpretative Decisions | Remove reference to withdrawn ATO IDs 2003/47 and 2002/785. |
Year of income: Year ended 30 June 2003
Legislative References:
Income Tax Assessment Act 1997
subsection 108-5(1)
paragraph 160A(a)
subsection 160M(6)
paragraph 160M(6)(b)
paragraph 160M(6B)(a)
section 160U
subparagraph 160U(6)(b)(i) Liquor Act 1982 (NSW)
the Act Gaming Machines Act 2001 (NSW)
paragraph 15(1)(a) Related ATO Interpretative Decisions
ATO ID 2003/46
Keywords
Capital gains tax
Acquisition of CGT assets
Amusement & gambling equipment
CGT asset construction & creation
CGT assets
Statutory licences
Date reviewed: 11 August 2017
ISSN: 1445-2782
| Date: | Version: | |
| 24 December 2003 | Original statement | |
| 4 July 2014 | Updated statement | |
| You are here | 11 August 2017 | Updated statement |