Private ruling: Income Tax - Capital allowances - Depreciating assets - Gaming Machine Entitlements
Published: June 2012
Ruling period: Year ended 30 June 2013
Date scheme commenced: The 2009 - 10 financial year

Ruling: Q1: Are gaming machine entitlements intangible assets as listed in subsection 40-30(2) of the Income Tax Assessment Act 1997 (ITAA 1997) and therefore depreciating assets as defined in subsection 40-30(1) of the ITAA 1997? | A1: No. A gaming machine entitlement is not an intangible asset as listed in subsection 40-30(2) of the ITAA 1997, therefore it is excluded from being a depreciating asset by paragraph 40-30(1)(c) of the ITAA 1997.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling The taxpayer, an approved gaming venue operator operating in an approved venue, acquired entitlements to operate gaming machines. A gaming machine entitlement allows an approved gaming venue to operate one gaming machine. Each entitlement remains in force for a set period of time. At the end of this period the entitlement will have a nil value and simply expire. A gaming entitlement can be transferred between venue operators.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 40-30(1) | Income Tax Assessment Act 1997 subsection 40-30(2)

Reasons for decision: Summary: A depreciating asset is defined in subsection 40-30(1) of the ITAA 1997 to be an asset that has a limited effective life and can reasonably be expected to decline in value over the time it is used. The definition excludes intangible assets except for those listed in subsection 40-30(2) of the ITAA 1997: paragraph 40-30(1)(c) of the ITAA 1997. A gaming machine entitlement allows an approved gaming venue to operate one gaming machine and as such gives the holder a legal right to operate a gaming machine. Therefore, a gaming machine entitlement is an intangible asset. To be a depreciating asset in Division 40 of the ITAA 1997, it needs to be an intangible asset of a kind listed in subsection 40-30(2). Subsection 40-30(2) of the ITAA 1997 specifies that the following intangible assets are depreciating assets if they are not trading stock: · mining, quarrying or prospecting rights and information; · items of intellectual property; · in-house software; · indefeasible rights to use a telecommunications cable system; · spectrum licences; · datacasting transmitter licences; and · telecommunications site access rights. A gaming machine entitlement is not an intangible asset as listed in subsection 40-30(2) of the ITAA 1997, therefore it is excluded from being a depreciating asset by paragraph 40-30(1)(c) of the ITAA 1997.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.