INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 13 - Options generally  

SECTION 160ZZC   OPTIONS  

160ZZC(1)   [Where Div 10, 10A, 11 or 11A applies]  

This section does not apply in relation to an option if Division 10, 10A, 11 or 11A applies in relation to that option.

160ZZC(2)   [Options that are personal-use assets]  

This section has effect for the purposes of this Part subject to the provisions of this Part relating to options that are personal-use assets.

160ZZC(3)   [Effect of grant of option]  

Subject to subsections (3A), (3AA) and (3AB) and to the following provisions of this section as to treating the grant of an option as part of a larger transaction, where an option has been granted:

(a) the grant of the option shall be deemed to have constituted a disposal of the option at the time when the grant took effect; and

(b) the option shall be deemed to have been owned by the grantor immediately before the disposal took place.

160ZZC(3AA)   [Option binding grantor to dispose of asset acquired before 20 September 1985]  

If an option was granted after 19 September 1985 but before 23 May 1986 that binds the grantor to dispose of an asset acquired before 20 September 1985, the grant of the option is not taken to have constituted the disposal of the option by the grantor but this subsection does not affect the operation of subsections (7) and (8) in relation to the option.

160ZZC(3AB)   [Option expires or is cancelled]  

If an option was granted after 19 September 1985 but before 23 May 1986 that binds the grantor to acquire an asset and the option expires without being exercised or is cancelled, released or abandoned, the grant of the option is not taken to have constituted the disposal of the option by the grantor.

160ZZC(3A)   [Option to acquire shares, debentures or units]  

Where, on or after 20 September 1985:

(a) a company grants an option to:

(i) acquire shares in the company; or

(ii) acquire debentures of the company; or

(b) the trustee of a unit trust grants an option to:

(i) acquire units in the unit trust; or

(ii) acquire debentures of the unit trust,

the following provisions have effect:

(c) the grant of the option shall not be taken to have constituted a disposal of the option at the time when the grant took effect;

(d) if the option is exercised - the grant of the option shall not be taken to have constituted a disposal of the option at any time;

(e) if the option expires without being exercised or is cancelled, released or abandoned:

(i) the grant of the option shall be taken to have constituted a disposal of the option at the time when the option expires or is cancelled, released or abandoned, as the case may be; and

(ii) the option shall be deemed to have been owned by the grantor immediately before the disposal took place; and

(iii) subsection 160ZD(2) does not apply in respect of the disposal.

160ZZC(3B)   [Debenture of unit trust]  

A reference in subsection (3A) to a debenture of a unit trust is a reference to anything issued by the trustee of the unit trust that, if the unit trust were a company, would be a debenture of the company.

160ZZC(4)   [Option relating to property grantor in fact never owns]  

Subsection (3) extends to:

(a) the case where the grantor of an option is bound by the option to dispose of what the grantor does not own and, because the option expires or is cancelled, released or abandoned, never has occasion to own; and

(b) the case where the grantor is bound by the option to acquire what, because the option expires or is cancelled, released or abandoned, the grantor does not acquire.

160ZZC(5)   [Renewal or extension of option]  

Where an option has been renewed or extended, the renewal or extension shall be deemed to have constituted the grant by the person who renewed or extended the option of a fresh option that took effect at the time immediately after the time when the first-mentioned option would, but for the renewal or extension, have expired.

160ZZC(6)   [Cost base of option]  

Notwithstanding section 160ZH , the cost base to a taxpayer of an option granted by the taxpayer comprises the amounts of expenditure incurred by the taxpayer in respect of the grant of the option and does not include any other amounts, and the indexed cost base and the reduced cost base shall be ascertained accordingly.

160ZZC(7)   [Effect of exercise of option on grantor]  

If an option is exercised, the grant of the option and the transaction entered into by the grantor in fulfilment of the grantor's obligations under the option shall be treated as a single transaction and accordingly, for the purposes of the application of this Part in relation to the grantor:

(a) if the option binds the grantor to dispose of an asset, the consideration for the option forms part of the consideration received by the grantor in respect of the disposal; and

(b) if the option binds the grantor to acquire an asset, the consideration for the option shall be deducted from the consideration paid or given by the grantor in respect of the acquisition pursuant to the grantor's obligations under the option.

160ZZC(8)   [Effect of exercise of option on grantee]  

An option shall not be taken to have been disposed of by the exercise of the option but, if an option is exercised, the acquisition of the option (whether directly from the grantor or not) and the transaction entered into by the person exercising the option in the exercise of that person's rights under the option shall be treated as a single transaction and accordingly, for the purposes of the application of this Part in relation to the person who exercised the option:

(a) if the option binds the grantor to dispose of an asset, the consideration for the option forms part of the consideration paid or given by the person who exercised the option in respect of the acquisition of the asset; and

(b) if the option binds the grantor to acquire an asset, the consideration for the option forms part of the incidental costs to the person who exercised the option of the disposal of the asset acquired by the grantor of the option.

160ZZC(9)   [Option granted prior to 20 September 1985]  

If an option that binds the grantor to dispose of an asset was granted before 20 September 1985 and exercised by the grantee on or after that date, paragraph (8)(a) does not apply but the market value of the option at the time when it was exercised forms part of the consideration paid or given by the person who exercised the option in respect of the acquisition of the asset.

160ZZC(9A)   [Issue of shares is disposal by company]  

For the purposes of subsections (8) and (9), despite paragraph 160M(5)(a), an issue of shares in a company is taken to constitute a disposal of shares by the company.

160ZZC(10)   [Amendment of assessments]  

Nothing in section 170 prevents the amendment of an assessment for the purpose of giving effect to subsection (7), (8) or (9).

160ZZC(11)   [Option binding grantor to acquire and dispose of asset]  

This section applies in relation to an option that binds the grantor both to acquire and to dispose of an asset as if the option were two separate options and one-half of the consideration in respect of the grant of the option were attributed to each of the separate options.

160ZZC(12)   [Forfeiture of deposit]  

Where a deposit of money or other consideration, being a deposit that was made in respect of a prospective purchase or other transaction that is cancelled or otherwise abandoned, is forfeited -

(a) the deposit shall be deemed to have been paid or given as consideration in respect of the grant by the person who received the benefit of the forfeiture of an option that bound the grantor to dispose of an asset and was not exercised; and

(b) any costs that the person who received the benefit of the forfeiture incurred in connection with the prospective purchase or other transaction shall be deemed to be amounts of expenditure incurred by that person in respect of the grant of the option.