• Flowchart 3.5

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Treatment of rights or options to acquire shares or units:

    • you paid for and which were issued directly to you from the company (but not under an employee share scheme) or trust, or
    • you acquired from an individual or entity that was not a shareholder or unit holder.

    Note:

    This flowchart does not apply to rights or options for the issue of units by the grantor of the rights or options if they were exercised before 27 May 2005.

    1. Did you acquire the rights or options before 20 September 1985?

    Yes

    Read question 2

    No

    Read question 4

    1. Did you exercise the rights or options?

     

    Yes

    Read question 3

    No

    Read answer 1

      

    1. Did you exercise the rights or options on or after 20 September 1985?

    Yes

    Read question 5

    No

    Read answer 4

    1. Did you exercise the rights or options?

       

    Yes

    Read answer 3  

    No

    Read answer 2  

      

    1. Were the rights or options ones which were renewed or extended after 20 September 1985?

    Yes

    Read question 6

    No

    Read answer 5

    1. Were they exercised before 27 May 2005?

    Yes

    Read answer 5

    No

    Read answer 3

    Answer 1

    You disregard any capital gain or capital loss you make on the sale or expiry of the rights or options.

    Answer 2

    If the capital proceeds on the sale or expiry of the rights or options are more than their cost base, you make a capital gain. If the capital proceeds are less than their reduced cost base, you make a capital loss.

    Answer 3

    1. The shares or units acquired on exercise of the rights or options are subject to capital gains tax.
    2. The acquisition date of the shares or units is the date of exercise of the rights or options.
    3. The first element of the cost base and the reduced cost base of the shares or units is:
      • the amount you paid for the rights or options, plus
      • the amount you paid for the shares or units on exercising the rights or options.
       

    Note:

    Although the shares or units are subject to capital gains tax, any capital gain or capital loss you make from exercising the rights or options to acquire those shares or units is disregarded.

    Answer 4

    You disregard any capital gain or capital loss on the shares or units acquired from the exercise of the rights or options because the shares or units were acquired before 20 September 1985.

    Answer 5

    1. The shares or units acquired on exercise of the rights or options are subject to capital gains tax.
    2. The acquisition date of the shares or units is the date of exercise of the rights or options.
    3. The first element of the cost base and the reduced cost base of the shares or units is:
      • the market value of the rights or options at the time you exercised them, plus
      • the amount you paid for the shares on exercising the rights or options.
       

    Note:

    Although the shares or units are subject to capital gains tax, any capital gain or capital loss you make from exercising the rights or options to acquire those shares or units is disregarded.

    Last modified: 10 Sep 2010QC 28058