½Û×ÓÊÓƵ

Options—capital gains treatment

C2.1001 Options and capital gains tax—overview

An option is an agreement between the person granting the option (the grantor) and the person taking on the option (the grantee) to buy or sell a specified quantity of something, eg land, shares, currency etc, at a price fixed under the option agreement. The option will last for a specific period and if not exercised will expire or lapse. Often a payment is made by the person taking on the option to the person granting the option. The definition of options includes an option binding the grantor to grant a lease for a premium or to enter into any other transaction which is not a sale¹.

Options constitute one of the forms of property which are assets for capital gains purposes². The treatment of options for the purpose of capital gains tax forms a distinct and separate code. Generally, the grant of an option is treated as the disposal