Tax Laws Amendment (2006 Measures No. 2) Act 2006 (58 of 2006)
Schedule 3 CGT treatment of options
Income Tax Assessment Act 1997
3 Subsection 134-1(1)
Repeal the subsection, substitute:
(1) This table sets out the effects of the exercise of an option (including an option that has been renewed or extended) on the *cost bases and *reduced cost bases of the grantor and the entity that exercises the option (the grantee ).
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Exercise of options |
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Item |
In this situation: |
Effect on cost base and reduced cost base: |
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1 |
Option binds grantor to: (a) *dispose of a *CGT asset; or (b) create (including grant or issue) a CGT asset (call option) |
For the grantee The first element of the grantee's *cost base and *reduced cost base for the CGT asset is what the grantee paid for the option (or to renew or extend it) plus any amount the grantee paid to exercise it For the grantor See section 116-65 |
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2 |
Option binds grantor to *acquire a *CGT asset (put option) |
For the grantor The first element of the grantor's *cost base and *reduced cost base for the asset acquired is any amount paid to exercise the option reduced by any payment received by the grantor for the option (or to renew or extend it) For the grantee The second element of the grantee's cost base and reduced cost base for the asset acquired by the grantor includes any payment the grantee made to acquire the option (or to renew or extend it) |
Note 1: If you granted, renewed or extended an option, CGT event C3 or D2 may happen.
Note 2: Item 1 in the table is modified for certain options granted before 20 September 1985: see section 134-1 of the Income Tax (Transitional Provisions) Act 1997.
Note 3: Item 1 in the table is modified for shares or rights acquired at a discount (within the meaning of Subdivision C of Division 13A of Part III of the Income Tax Assessment Act 1936) under an employee share scheme - in certain circumstances you can be taken to have paid the market value for an option: see Subdivision 130-D and section 112-15.
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