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Amendments to the capital gains tax treatment of options.

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Friday 27th May 2005


The Government will introduce amendments to the capital gains tax (CGT) legislation relating to options, the Minister for Revenue and Assistant Treasurer, Mal Brough, announced today.

Amendments to the Income Tax Assessment Act 1997 will ensure:

● the option provisions in Division 134 and their related capital proceeds provisions apply to options for the creating,

granting or issuing of assets in the same way as they apply to options for the disposal of assets and to options for the issuing of shares, and ● these provisions apply to the renewing or extending of options in the same way as they apply to the granting of options.

● to the Income Tax (Transitional Provisions) Act 1997 will ensure:

● a provision (section 134-1) for options granted before 20 September 1985 binding the grantor to dispose of a CGT asset

will also apply to options to create, grant or issue an asset but will not apply to options last renewed or extended on or after 20 September 1985.

Examples of the kinds of option to which the amended provisions will apply are options for granting a lease or easement or for issuing units in a unit trust.

For example, where a grantee exercises an option that binds the grantor to grant it a lease, the amendment will allow for the inclusion in the CGT cost base of the lease the amount paid for the option plus any amount paid to exercise it.

The amendments will apply to options exercised on or after today.

Media contact: Carlie Hogan (02) 6277 7360

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