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If you own shares or units, you may be issued rights or options to acquire additional shares or units at a specified price.
Rights and options issued directly to you from a company or trust for no cost
You are taken to have acquired the rights and options at the same time as you acquired the original shares or units. Therefore, if you acquired the original shares or units before 20 September 1985, you disregard any capital gain or capital loss you make when the rights or options expire or are sold as they are pre-CGT assets.
If you acquired the original shares or units on or after 20 September 1985, you make a capital gain if the capital proceeds on the sale or expiry of the rights or options are more than their cost base. You make a capital loss if the reduced cost base of the rights or options is more than those capital proceeds.
Rights and options you paid to acquire from a company or trust - or that you acquired from another person
If you acquired your rights or options on or after 20 September 1985, they are treated much like any other CGT asset and are subject to CGT.
Flowcharts 3, 4 and 5 in appendix 3 summarise the different rules applying to the treatment of rights or options to acquire shares or units.
Last modified: 06 Oct 2009QC 18504