Not sure if this has been covered before in plain english (if so, please point me in right direction) but I have a question regarding converting company issued options and taxation.
I bought options on market in a company that I paid 2c for and the exercise price is 5c with 4 year expiry to convert them into shares. Total outlay will be 7c per share, If the share price lets say is 20c on conversion after a couple years and I sell instantly, how does this work with tax?
Is it the difference between my total outlay 7cents - 20cents = I make 13 cents so 13 cents is taxable? Or are my shares considered "acquired" at 20c since that's the price they were when the options converted, resulting in 0 tax (since I'm selling them instantly)?
If i hold options for a couple of years and then convert, does this qualify for the capital gains tax exemption for holding over 12 months? or does this time start again on conversion, effectively paying 100% tax on profits if I sold the shares within 12 months.
What are the benefits of conversion to selling the options on market?
Thanks in advance, I couldn't find anything (that I could easily understand from both the ATO and ASX websites, if they showed examples it would have made all the difference)
