• Chapter B3-Additional information for shares and units

    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

    This chapter covers less common situations for personal investors, including:

    • share buy-backs
    • takeovers and mergers
    • dividend reinvestment plans
    • employee share schemes
    • bonus shares and bonus units.

    Note-Rights or options to acquire shares or units

    If you hold shares or units, you may be issued rights or options to acquire additional shares or units at a specified price.

    If the rights and options are offered at no cost, you are taken to have acquired them 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, any capital gain or capital loss you make from the sale of the rights or options is disregarded.

    If you acquired your original shares or units (or rights or options from another entity) on or after 20 September 1985, they are treated much like any other CGT asset and are subject to CGT. This is also the case if you paid the company or fund an amount for them.

    There are special rules that apply if you exercise the rights. For more information, refer to the publication Guide to capital gains tax.

    Last modified: 06 Oct 2009QC 27431