Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-3 - CAPITAL GAINS AND LOSSES: SPECIAL TOPICS  

Division 124 - Replacement-asset roll-overs  

Subdivision 124-R - Water entitlements  

Replacement case

SECTION 124-1105   Replacement water entitlements roll-over  

Automatic roll-over for single water entitlements

124-1105(1)    
There is a roll-over if:

(a) your ownership of a *water entitlement (the original entitlement ) ends, resulting in a *CGT event happening; and

(b) as a result of your ownership of the original entitlement ending, you *acquire one or more water entitlements (each of which is a new entitlement ); and

(c) if you are a foreign resident just before your ownership of the original entitlement ends, or you are the trustee of a trust that is a *foreign trust for CGT purposes for the income year in which your ownership of the original entitlement ends:

(i) the original entitlement was *taxable Australian property just before you stopped owning it; and

(ii) if there is only one new entitlement - the new entitlement is taxable Australian property just after you acquire it; and

(iii) if there is more than one new entitlement - each new entitlement is taxable Australian property just after you acquire it; and

(d) you have not chosen a roll-over in relation to the original entitlement under subsection (2).

Elective roll-over for bundled water entitlements

124-1105(2)    
There is a roll-over if:

(a) your ownership of more than one *water entitlement (each of which is an original entitlement ) ends, resulting in a *CGT event happening; and

(b) as a result of your ownership of the original entitlements ending, you *acquire one or more water entitlements (each of which is a new entitlement ); and

(c) if you are a foreign resident just before your ownership of the original entitlements ends, or you are the trustee of a trust that is a *foreign trust for CGT purposes for the income year in which your ownership of the original entitlements ends:

(i) each original entitlement was *taxable Australian property just before you stopped owning it; and

(ii) if there is only one new entitlement - the new entitlement is taxable Australian property just after you acquire it; and

(iii) if there is more than one new entitlement - each new entitlement is taxable Australian property just after you acquire it; and

(d) you choose to obtain the roll-over.

Note:

Section 103-25 tells you when the choice must be made.

No roll-over if Subdivision 124-C applies

124-1105(3)    
However, there is no roll-over in relation to a *water entitlement under this section if there is a roll-over in relation to the water entitlement under Subdivision 124-C (statutory licences).

Meaning of water entitlement

124-1105(4)    
A water entitlement is a legal or equitable right that an entity owns that relates to water, including a right to:

(a) receive water; or

(b) take water from a water resource; or

(c) have water delivered; or

(d) deliver water;

and includes a right that must be owned by the entity in order to own a right covered by paragraph (a), (b), (c) or (d).

Example:

Philip owns a share in Big Pump Irrigation Ltd. The share provides Philip with the right to receive dividends, to participate in the running of the company and to have a separate contractual agreement with Big Pump Irrigation Ltd for the delivery of 1 megalitre of water. Philip has such an agreement. Philip ' s agreement is a water entitlement . Philip ' s share is also a water entitlement because he must own the share in order to have a contractual arrangement with Big Pump Irrigation Ltd for the delivery of water.