rock & jimmy, thanks for the clarification - I'm very happy to stand corrected. So, my reading of the ATO information, which I quote here in parts, is as follows:
THE GOOD PART
1. Sale of options:
"If you acquired your rights or options on or after 20 September 1985, they are treated in much the same way as any other CGT asset and are subject to CGT."
I interpret the above to mean options would be treated the same as shares and so after holding options for more than 12 months the CGT discount applies.
HOWEVER...
2. Shares acquired by exercise of options:
"The acquisition date of the shares or units is the date you exercise the rights or options to acquire the shares or units."
This suggests the 12 month CGT discount clock for shares obtained by exercise of options starts when the options are converted.
At the bottom of the page it says:
"CGT discount on shares or units acquired from exercise of rights or options:
You can only use the discount method to calculate your capital gain from an asset if you own it for at least 12 months. In calculating any capital gain on shares or units you acquire from the exercise of a right or option, the 12-month period applies from the date you acquire the shares or units (not the date you acquired the right or option)."
The above quote appears to confirm that. This suggests to me we still need to be careful if we decide to exercise the options when we then sell the shares. In the case where someone wants to convert options that they've held for more than 12 months but then wants to sell the shares within 12 months of conversion, they are better off selling the options to obtain the CGT discount on the options before buying the shares. Otherwise they may not get the CGT discount benefit on the options? That seems like a strange situation but means caution and consideration about timing is still required.
Clear as mud think...it's probably still worth getting an official tax accountant's opinion on it so as to avoid an expensive mistake.
Cheers, Sharks.
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