Issue
Is an access licence, which is granted to the taxpayer under section 63 of the Water Management Act 2000 (NSW) (WMA 2000), a CGT asset as defined in section 108-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
Yes. An access licence granted under section 63 of the WMA 2000 is a CGT asset as defined in section 108-5 of the ITAA 1997.
Facts
The taxpayer holds an access licence under section 63 of the WMA 2000.
Reasons for Decision
Subsection 108-5(1) of the ITAA 1997 defines a CGT asset as (a) any kind of property; or (b) a legal or equitable right that is not property.
Under subsection 56(1) of the WMA 2000, an access licence entitles its holder to take water subject to the specifications applicable to that licence. This entitlement is a statutory right.
Therefore the licence falls within the definition of 'CGT asset' in subsection 108-5(1) of the ITAA 1997.
[Note: The same principle applies to all statutory water rights under the legislation applying in the various Australian States.]