I think reading ATO-ese is currently beyond my abilities... didn't sleep enough last night.
What I said last doesn't make sense either, but I'll have to fine-tooth-comb that page to make sure what they are actually saying.
What would make sense to me is (with example values):
Dec 2010, SSNO, 100000 units bought at 5c
Mar 2011, SSNO, 100000 units exercised for 1.5c per unit (costing $1500) Turns into SSN, 100000 units effectively bought Mar 2011 Cost base (price for later CGT calcs) = 6.5c per share No CGT liability on the options
Jun 2012, SSN, 100000 units sold for 30c per unit Cost base = $6500 Sale price = $30000 50% CGT at marginal tax rate over $23500
Because this means you don't pay taxes over the options you exercised... in essence you push that liability forward into SSN starting from the exercise date.
This also means that you don't end up paying tax over the amount you paid to exercise the options since this becomes part of the cost.
Now, that is what seems sensible to me, but I haven't completely convinced myself yet that that's what the ATO website is actually saying.
SSN Price at posting:
16.5¢ Sentiment: ST Buy Disclosure: Held
