Private ruling: Capital gains tax – Statutory licences
Date of advice: 21 December 2018
Published: April 2019
Ruling period: Income tax year ended 30 June 2019 | Income tax year ended 30 June 2020 | Income tax year ended 30 June 2021 | Income tax year ended 30 June 2022 | Income tax year ended 30 June 2023 | Income tax year ended 30 June 2024

Ruling: Q1: 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)? | A1: Yes. | Q2: 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? | A2: Yes. | Q3: 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? | A3: No.


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: Summary: 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.