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Tax Laws Amendment (2008 Measures No. 3) Bill 2008

Schedule 1 Shareholder and unitholder rights


Income Tax Assessment Act 1997

1  Section 11-55 (after table item headed “repayable amounts”)


rights to acquire shares or units


market value of at time of issue..............................................


2  At the end of Division 59


59-40   Issue of rights

             (1)  The * market value, as at the time of issue (the issue time ), of rights issued to you:

                     (a)  by a company to * acquire * shares in that company; or

                     (b)  by a trustee of a unit trust to acquire units in that trust;

is not assessable income and is not * exempt income as at the issue time if the conditions in subsection (2) are satisfied.

             (2)  The conditions are as follows:

                     (a)  at the issue time, you must already own * shares in the company or units in the unit trust (the original interests );

                     (b)  the rights must be issued to you because of your ownership of the original interests;

                     (c)  the original interests and the rights must not be * revenue assets or * trading stock at the issue time;

                     (d)  the rights must not have been acquired (within the meaning of section 139G of the Income Tax Assessment Act 1936 ) under an * employee share scheme;

                     (e)  the original interests and the rights must not be * traditional securities;

                      (f)  the original interests must not be * convertible interests.

3  Paragraph 104-135(1)(b)

Omit “ 1936 .”, substitute:

                            1936 ; and

                     (c)  the payment is not included in your assessable income.

4  Before paragraph 104-135(1A)(a)


                    (aa)  * non-assessable non-exempt income; or

5  After paragraph 104-155(5)(e)


                    (ea)  a company grants an option to dispose of * shares in the company to the company; or

6  Subsection 112-20(3) (at the end of the table)



A right to * dispose of a * share in a company

it was issued to you by the company and was exercised by you or by another entity who became the owner of the right

7  At the end of Subdivision 112-A


112-37   Put options

                   The first element of the * cost base and * reduced cost base of a right to * dispose of a * share in a company that you * acquire as a result of * CGT event D2 happening to the company is the sum of:

                     (a)  the amount that is included in your assessable income as ordinary income as a result of your acquisition of the right; and

                     (b)  the amount (if any) that you paid to acquire the right.

8  Subsection 118-20(4)

After “a provision of this Act”, insert “(except section 59-40)”.

9  Application

The amendments made by this Schedule apply to rights issued on or after 1 July 2001.