Rights issues: taxation treatment of call options

This measure will restore the taxation treatment of call options issued by companies to their shareholders that existed prior to the decision of the High Court of Australia in Commissioner of Taxation v. McNeil (2007) - McNeil's case. Shareholders issued with rights by companies seeking to raise capital will not have an income tax liability at the time of issue. These rights issues will instead be treated on capital account.

The amendments will apply from the 2001-02 income year.

Press release

For more information, see the former Minister for Revenue and Assistant Treasurer's press release number 074/2007 which issued on 26 June 2007 and Treasurer's press release number 019/2008 issued on 8 April 2008.

Administration treatment Taxpayers affected by the proposal will need to consider the government's announcement if they have a lodgment obligation prior to the proposal becoming law. In this instance, the Tax Office will not allocate resources to enforce compliance with the existing law until the proposal has been enacted.