Document ID: chunk:federal_register_of_legislation:C2025C00029:section:14:p12
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 14 (pt 12/20)
Character Range: 1805847–1808434

or abandoned.
 (2) The time of the event is when the option ends.
 (3) The company or trustee makes a capital gain if the *capital proceeds from the grant of the option are more than the expenditure incurred in granting it. It makes a capital loss if those capital proceeds are less.
 (4) 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.

Exception
 (5) A *capital gain or *capital loss the company or trustee makes is disregarded if it granted the option before 20 September 1985.
Note: This subsection is modified for the purpose of calculating the attributable income of a CFC: see section 418 of the Income Tax Assessment Act 1936.

Subdivision 104‑D—Bringing into existence a CGT asset

Table of sections
104‑35 Creating contractual or other rights: CGT event D1
104‑40 Granting an option: CGT event D2
104‑45 Granting a right to income from mining: CGT event D3
104‑47 Conservation covenants: CGT event D4

104‑35  Creating contractual or other rights: CGT event D1
 (1) CGT event D1 happens if you create a contractual right or other legal or equitable right in another entity.
Example: You enter into a contract with the purchaser of your business not to operate a similar business in the same town. The contract states that $20,000 was paid for this.
 You have created a contractual right in favour of the purchaser. If you breach the contract, the purchaser can enforce that right.
 (2) The time of the event is when you enter into the contract or create the other right.
 (3) You make a capital gain if the *capital proceeds from creating the right are more than the *incidental costs you incurred that relate to the event. You make a capital loss if those capital proceeds are less.
Example: To continue the example: If you paid your lawyer $1,500 to draw up the contract, you make a capital gain of:

 (4) The costs can include giving property: see section 103‑5. However, they do not include an amount you have received as *recoupment of them and that is not included in your assessable income, or an amount to the extent that you have deducted or can deduct it.

Exceptions
 (5) CGT event D1 does not happen if:
 (a) you created the right by borrowing money or obtaining credit from another entity; or
 (b) the right requires you to do something that is another *CGT event that happens to you; or
 (c) a company issues or allots *equity interests or *non‑equity shares in the company; or
 (d) the trustee of a unit trust issues