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Edited version of your written advice
Authorisation Number:
Date of advice: 1 June 2016
Ruling
Subject: Acquisition date of a CGT asset
Question
Is the acquisition date of your water allocation rights 20XX for capital gains tax purposes?
Answer
Yes.
This ruling applies for the following period(s)
Year ended 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
The scheme commences on
1 July 2014
Relevant facts and circumstances
Before 20 September 1985 a rural property was purchased by family members as tenants in common.
A business was operated on this property as a partnership.
In 20WW a partner in the partnership passed away.
Upon their passing the Trust inherited AA% of the property from the deceased estate and purchased the balance from the deceased estate and a different Trust purchased the third partners interest in the property.
In 20XX an application for Change of Allocation to the Water Licences was made.
The dealing date on your registration confirmation statement is 20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 - Subsection 109-5
Reasons for decision
Subsection 109-5 of the Income Tax Assessment Act 1997 (ITAA 1997) states that:
In general, you acquire a *CGT asset when you become its owner. In this case, the time when you *acquire the asset is when you become its owner.
If you acquire a capital gains tax (CGT) asset as a result of a CGT event, that is, disposal of an asset, certain rules determine when you are taken to have acquired the asset. These rules depend on which event is involved.
Generally, you acquire a CGT asset when you become its owner. You may acquire a CGT asset when someone else has a CGT event (for example, the transfer of land to you under a contract of sale). If you acquired an asset because of a CGT event, you are generally taken to have acquired the asset at the time of the CGT event. For example, if you enter into a contract to purchase a CGT asset, the time of acquisition is when you enter into the contract.
In your case, as there appears to be no contract for the change in ownership for the water allocation rights, the time of acquisition would be the date the registered allocation holder was adjusted with the department of Natural Resources and Mines in the relevant state to accurately reflect the new holders and interest in the water allocation rights. This is the time when you became the owner of the water allocation rights for CGT purposes.