Draft Taxation Determination

TD 93/D63

Income tax: capital gains: under what circumstances will Divisions 10 and 11 of Part IIIA of the Income Tax Assessment Act 1936 apply to options or rights issued by a company to an existing shareholder?

  • Please note that the PDF version is the authorised version of this draft ruling.
    This document has been finalised by TD 93/78.

FOI status:

draft only - for comment

Preamble

Draft Taxation Determinations (TDs) present the preliminary, though considered, views of the ATO. Draft TDs may not be relied on; only final TDs are authoritative statements of the ATO.

1. Divisions 10 and 11 of Part IIIA will apply to options or rights issued to a shareholder in respect of that shareholder's existing shares in the issuing company ie. Divisions 10 and 11 will only apply when options or rights are issued pro-rata to existing shareholders.

2. Divisions 10 and 11 of Part IIIA will not apply to options or rights issued other than in respect of existing shares in the issuing company.

Example:

A, B and C hold shares of the same class in G Ltd.
A placement of options is made by G Ltd to B as a gift. A and C are not offered any options.
The options issued to B are not issued to B in respect of B's existing shares in G Ltd. Accordingly, Division 11 will not apply to the options issued to B.

Commissioner of Taxation
18 March 1993

References


BO AUD BRIS CBD (CGTDET46)

ISSN 1038 - 8982

Related Rulings/Determinations:

TD 93/D64

Subject References:
options
rights

Legislative References:
ITAA Part IIIA Division 10
ITAA Part IIIA Division 11

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