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ATO Interpretative Decision

ATO ID 2002/404 (Withdrawn)

Income Tax

Derivation of income - premiums held by Options Clearing House
FOI status: may be released
  • This ATO ID is withdrawn from the database as it is a straight application of the law and does not contain an intepretative decision.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

When is an options trader, assessed under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) for premiums credited to their account by the Options Clearing House (OCH)?

Decision

An options trader is assessed under section 6-5 of the ITAA 1997 in the income year the premiums are credited to the taxpayer's OCH account.

Facts

The taxpayer deals in exchange traded options. The taxpayer has sold put options that do not expire for a number of years. The taxpayer's OCH account is credited with the premiums upon sale.

Reasons for Decision

In determining when a taxpayer has derived an amount of ordinary income, subsection 6-5(4) of the ITAA 1997 provides that the taxpayer is taken to have received the amount when it is applied or dealt with in any way on the taxpayer's behalf or as the taxpayer directs.

Any premium credited to the taxpayer's account at the OCH is assessable in that income year.

Date of decision:  13 March 2002

Year of income:  Year ending 30 June 2002 Year ending 30 June 2003 Year ending 30 June 2004 Year ending 30 June 2005

Legislative References:
Income Tax Assessment Act 1997
   subsection 6-5(4)

Keywords
Income
Put options
Securities rights & options

Business Line:  Private Groups and High Wealth Individuals

Date of publication:  28 March 2002

ISSN: 1445-2782

history
  Date: Version:
  13 March 2002 Original statement
You are here 13 June 2008 Archived

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