Capital gains tax
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A company or trust you own shares or units in may issue you rights or options to acquire additional shares or units at a specified price. The market value of these rights at the time the company or trust issues them to you is non-assessable, non-exempt income, if all of the following apply:
You make a capital gain or loss when a capital gains tax (CGT) event happens to either of the following:
You cannot reduce the amount of any capital gain from a CGT event by the amount that was previously non-assessable, non-exempt income.
A company or trust you are a shareholder or unit holder of may issue rights or options directly to you for no cost. If this happens, you are taken to have acquired the rights and options at the same time as you acquired the original shares or units.
So, if you acquired the original shares or units before 20 September 1985, you disregard any capital gain or capital loss you make when either of the following happens:
This is because they are pre-CGT assets.
If you acquired the original shares or units on or after 20 September 1985, you may make a capital gain when either of the following happens:
You make a:
If you paid to acquire rights and options from a company or trust, or you acquired them from another person on or after 20 September 1985:
Some or all of this payment may be a retail premium if you receive a payment because:
You receive a retail premium if the following occurs:
The retail premium will be the amount paid to you, generally worked out on a pro rata basis by the company because you are a shareholder or unit holder and you do not participate. The retail premium the company pays will generally be a share of all or part of the difference between the clearing price of the shares and the offer price.
Retail premiums are unfranked dividends, or alternatively ordinary income, and should not be treated as capital gains. Shareholders who receive the premiums are not eligible to claim the CGT discount.
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Taxing retail premiums
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