Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 104 - CGT events  

Subdivision 104-D - Bringing into existence a CGT asset  

SECTION 104-40   Granting an option: CGT event D2  

104-40(1)    
CGT event D2 happens if you grant an option to an entity, or renew or extend an option you had granted.

Note:

Some options are not covered: see subsections (6) and (7).

104-40(2)    
The time of the event is when you grant, renew or extend the option.

104-40(3)    

You make a capital gain if the *capital proceeds from the grant, renewal or extension of the option are more than the expenditure you incurred to grant, renew or extend it. You make a capital loss if those capital proceeds are less .

104-40(4)    
The expenditure can include giving property: see section 103-5 . However, it does not include an amount you have received as *recoupment of it and that is not included in your assessable income, or an amount to the extent that you have deducted or can deduct it.

Exceptions

104-40(5)    
A *capital gain or *capital loss you make from the grant, renewal or extension of the option is disregarded if the option is exercised.

Note 1:

Section 134-1 sets out the consequences of an option being exercised.

Note 2:

A capital gain or capital loss you made for the 1997-98 income year or an earlier income year under former Part IIIA of the Income Tax Assessment Act 1936 is also disregarded where the option is exercised in the 1998-99 income year or a later one: see section 104-40 of the Income Tax (Transitional Provisions) Act 1997 .

104-40(6)    
This section does not apply to an option granted, renewed or extended by a company or the trustee of a unit trust to *acquire a *CGT asset that is:

(a) *shares in the company or units in the unit trust; or

(b) debentures of the company or unit trust.

Note:

Section 104-30 deals with this situation.

104-40(7)    
Nor does it apply to an option relating to a *personal use asset or a *collectable.