Tax Laws Amendment (2007 Measures No. 5) Act 2007 (164 of 2007)

Schedule 7   Statutory licences

Part 1   Main amendments

Income Tax (Transitional Provisions) Act 1997

4   Before Division 126

Insert:

Division 124 - Replacement-asset roll-overs

Subdivision 124-C - Statutory licences

124-140 New statutory licence - ASGE licence etc.

(1) Sections 124-141 and 124-142 apply if:

(a) there are one or more roll-overs under section 124-140 of the Income Tax Assessment Act 1997 where:

(i) your ownership of one or more statutory licences (each of which is an original licence ) ends, resulting in CGT event C2 happening to the licence (or to each of the licences as part of an arrangement); and

(ii) you are issued one or more new licences (each of which is a new licence ) for the original licence (or original licences); and

(b) if there was only one original licence - that licence is covered under subsection (2); and

(c) if there was more than one original licence - at least one of the original licences was covered under subsection (2); and

(d) if there is only one new licence - that licence is covered under subsection (3); and

(e) if there is more than one new licence - only one of the new licences is covered under subsection (3); and

(f) the original licence (or at least one of the original licences) has an ineligible part (as described in section 124-150 of the Income Tax Assessment Act 1997).

(2) A licence is covered under this subsection if it is:

(a) a bore licence issued under the Water Act 1912 of New South Wales; or

(b) a licence of a kind specified in the regulations.

(3) A licence is covered under this subsection if it is:

(a) an aquifer access licence under the Water Management Act 2000 of New South Wales issued in accordance with the New South Wales Achieving Sustainable Groundwater Entitlements program (the ASGE program ); or

(b) a licence of a kind specified in the regulations.

124-141 ASGE licence etc. - cost base of ineligible part

(1) For an original licence that has an ineligible part, the cost base of the ineligible part is the cost base of the original licence multiplied by the amount worked out under the formula:

Total ineligible proceeds / (Total ineligible proceeds + Value of new licence)

where:

total ineligible proceeds is the total of the ineligible proceeds (as described in section 124-150 of the Income Tax Assessment Act 1997) in relation to all of the original licences that have an ineligible part.

value of new licence is:

(a) if the new licence is an aquifer access licence mentioned in paragraph 124-40(3)(a) - the 2002 value assigned under the ASGE program to the new licence; or

(b) otherwise - the value of the new licence worked out in accordance with the regulations.

(2) The regulations may specify one or more ways of working out the value of a licence (other than an aquifer access licence mentioned in paragraph 124-40(3)(a)) for the purposes of this section.

(3) For an original licence that has an ineligible part, the reduced cost base of the ineligible part is the reduced cost base of the original licence multiplied by the amount worked under the formula set out in subsection (1).

124-142 ASGE licence etc. - cost base of aquifer access licence etc.

(1) The first element of the cost base and reduced cost base of the new licence that is covered under subsection 124-140(3) is the total of the cost bases of the original licences.

Note: For the purposes of this section, the cost base of each original licence that has an ineligible part is reduced in accordance with subsection 124-150(4) of the Income Tax Assessment Act 1997.

(2) The cost base and reduced cost base of any new licence that is not covered under subsection 124-140(3) is nil.

(3) Subsections (4) and (5) apply if:

(a) there was more than one original licence; and

(b) some of the original licences were acquired before 20 September 1985; and

(c) subsection 124-165(2) of the Income Tax Assessment Act 1997 applies in relation to the new licence that is covered under subsection 124-140(3) (splitting that licence into 2 separate CGT assets).

(4) For the purposes of subsection (2), treat the asset that is taken under paragraph 124-165(2)(a) of that Act to have been acquired on or after 20 September 1985 as a new licence that is covered under subsection 124-140(3) of this Act.

(5) Work out the first element of the cost base and reduced cost base of that asset in accordance with subsection 124-165(3) of that Act.