CGT Determination Number 16

TD 16

Capital Gains: What is the date of acquisition (or date of disposal) of an asset acquired (or disposed of) on the exercise of an option?

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FOI status:

1. Where an option is exercised, the acquisition (or grant) of the option and the transaction entered into in exercising the rights and obligations under the option are treated as a single transaction (subsections 160ZZC(7) and (8)).

2. The date of acquisition (or date of disposal) of the asset is the date, determined in accordance with section 160U, of the transaction entered into as a result of the exercise of the option.

Example:

On 1 April 1990, a landowner grants a taxpayer an option to buy his or her property before 30 June 1991 for $100,000.

The option fee is $10,000.

The taxpayer exercises the option. The contract for the sale of the land pursuant to the exercise of the option is executed on 1 June 1991.

The date of the taxpayer's acquisition of the land is 1 June 1991, the date the contract for sale of the land was made (subsection 160U(3)). Correspondingly, this will also be the date of disposal for the vendor landowner.

Commissioner of Taxation
31 October 1991

References

ATO references:
NO BRIS LAF

Subject References:
Date of acquisition;
Exercise of an option

Legislative References:
160ZZC,
160U