CGT means Capital Gains Tax. In Australia if we hold a share for more than 12 months and then sell it, we receive a 50% discount on the assessable gain. For example if I make $1,000,000 on the sale of BAU and I have held the shares for more than 12 months, than I am only assessed on $500,000 and this amount is added to my assessable income and taxed at marginal tax rates.
With regards to BAUO, once the period is up (Jan 2009) you will need to convert your options to ordinary shares for 20c per option (you can exercise your options at anytime from now up until Jan 2009). So if you own 100,000 options, you will need to send a cheque in for $20,000. As Tibbs pointed out, the date of ownership on your new ordinary BAU shares (for CGT purposes) begins at the date your exercise your options and you do not have to pay any tax at this point in time on the options, as you have not yet realised any capital gain.
However if you sell your options on market before the exercise date, than it is treated as a normal share transaction. As the exercise date is Jan 09, this is less than 12 months from the issue date, so any capital gain made on the sale of BAUO will be fully assessable to everyone.
I hope this answers your question and gives Tibbs a bit of a breather!
Cheers, Jalinski
BAU Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
