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Edited version of your written advice
Authorisation Number: 1051472449369
Date of advice: 11 January 2019
Ruling
Subject: Beneficiaries of the trust
Question 1
Do Licence A and Licence B each constitute a statutory licence as defined in subsection 124-140(3) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
Question 2
If the answer to Question 1 is yes, will termination of Licence A and termination of Licence B each cause CGT event C2 to happen under section 104-25 of the ITAA 1997?
Answer
Yes.
Question 3
If the answer to Question 2 is yes, and no capital proceeds have been received for the purposes of section 116-20 of the ITAA 1997, will the market value of Licence A and Licence B be taken to have been received in respect of each CGT event C2 due to subsection 116-30(1) of the ITAA 1997?
Answer
No.
This ruling applies for the following periods:
Income tax year ended 30 June 20XX
Income tax year ended 30 June 20XX
Income tax year ended 30 June 20XX
Income tax year ended 30 June 20XX
Income tax year ended 30 June 20XX
Income tax year ended 30 June 20XX
Relevant legislative provisions
Income Tax Assessment Act 1997 section 104-25
Income Tax Assessment Act 1997 subsection 116-30(1)
Income Tax Assessment Act 1997 subparagraph 116-30(3)(a)(ii)
Income Tax Assessment Act 1997 subsection 124-140(3)
Reasons for decision
The Commissioner of Taxation ruled that Licence A and Licence B were both a statutory licence as defined in subsection 124-140(3) of the Income Tax Assessment Act 1997 (ITAA 1997).
The Commissioner of Taxation also ruled that the termination of Licence A and Licence B would each cause CGT event C2 to happen under section 104-25 of the ITAA 1997.
The Commissioner of Taxation also ruled that as both Licence A and Licence B constituted a statutory licence as defined in subsection 124-140(3) of the ITAA 1997 the requirements of subparagraph 116-30(3)(a)(ii) of the ITAA 1997 were satisfied and the market value of Licence A and Licence B would not be taken to have been received in respect of each CGT event C2 due to subsection 116-30(1) of the ITAA 1997.