Income Tax Assessment Act 1997



Division 104 - CGT events  

Subdivision 104-D - Bringing into existence a CGT asset  

SECTION 104-40   Granting an option: CGT event D2  

CGT event D2 happens if you grant an option to an entity, or renew or extend an option you had granted.


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

The time of the event is when you grant, renew or extend the option.


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 .

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

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 .

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.


Section 104-30 deals with this situation.

Nor does it apply to an option relating to a *personal use asset or a *collectable.


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