ATO Interpretative Decision
ATO ID 2004/390 (Withdrawn)
Capital gains tax: CGT event - carbon sequestration right - disposal of underlying land
FOI status: may be released
Status of this decision: Decision withdrawn 5 May 2017.
|CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.|
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Does a CGT event under Division 104 of the Income Tax Assessment Act 1997 (ITAA 1997) happen to the taxpayer, an investor in a carbon sequestration right, when the landowner sells the land in relation to which the right was created?
No. A CGT event under Division 104 of the ITAA 1997 does not happen to the taxpayer when the landowner sells the land in relation to which the right was created.
The taxpayer acquired the carbon sequestration right, as defined in section 87A of the Conveyancing Act 1919 (NSW) (Conveyancing Act), from the landowner under a contract for 20 years. In the fifth year, the landowner sold the land to another person.
Reasons for Decision
A carbon sequestration right is a forestry right under section 87A of the Conveyancing Act. The forestry right is deemed to be a profit à prendre under section 88AB of the Conveyancing Act.
As a result, even though the ownership of the underlying land changes, no CGT event happens in relation to the carbon sequestration right. As a profit à prendre, it binds the taxpayer and the subsequent landowner.
While a CGT event happens when the landowner disposes of the land, a CGT event does not happen to the taxpayer as there is no disposal of the carbon sequestration right.
Date of decision: 24 February 2004
|Year of income:||Year ended 30 June 2004|
Income Tax Assessment Act 1997
Conveyancing Act 1919 (NSW)
Related ATO Interpretative Decisions
ATO ID 2004/171
ATO ID 2004/172
ATO ID 2004/163
ATO ID 2004/391
Capital gains tax
Carbon sequestration rights
Profits a prendre
Siebel/TDMS reference number: 3944384; 1-5IQ22MS; 1-AXRBIPX
Business line: Private Groups and High Wealth Individuals
Date of publication: 7 May 2004
Date reviewed: 24 June 2014
|ATO ID 2004/390 (Withdrawn) history