ATO ID 2003/46: Capital Gains Tax: CGT event - poker machine entitlement acquired by a NSW hotelier
Date of decision: 27 November 2002
Year of income: Year ended 30 June 2002
Business line: Private Groups and High Wealth Individuals

Issue
Did a CGT event happen under Division 104 of the Income Tax Assessment Act 1997 (ITAA 1997) when a NSW hotelier acquired the initial allocation of a poker machine entitlement under paragraph 15(1)(a) of the Gaming Machines Act 2001 (NSW)?

Decision
No. There was no CGT event under Division 104 of the ITAA 1997 when the hotelier acquired the initial allocation of a poker machine entitlement under paragraph 15(1)(a) of the Gaming Machines Act 2001 (NSW).

Facts
Prior to the commencement of the Gaming Machines Act 2001 (NSW) (Gaming Machines Act), hoteliers in NSW were authorised to hold poker machines under the Liquor Act 1982 (NSW) (Liquor Act). On the commencement of the Gaming Machines Act, an initial allocation of poker machine entitlements was made under paragraph 15(1)(a) of that Act. One poker machine entitlement was allocated for each approved poker machine that comprised the frozen number of approved poker machines for a hotel as determined by the Liquor Administration Board. Furthermore, the savings provisions in Schedule 1 of the Gaming Machines Act carried over existing gaming machine approvals and authorisations, and existing gaming-related licences.

Reasons for decision
Summary: Legal rights fall within the definition of 'CGT asset' at subsection 108-5(1) of the ITAA 1997. The rights pertaining to each approved poker machine, kept in a hotel, for which a poker machine entitlement was allocated, were effectively carried over from the Liquor Act to the Gaming Machines Act. This was facilitated by paragraph 15(1)(a) and the savings provisions in Schedule 1 of the latter statute.

Legislative references: Income Tax Assessment Act 1997 Division 104 subsection 108-5(1)
Subject references: Amusement & gambling equipment Capital gains tax CGT assets CGT events