12 Mar 12 Taxpayer obtained contractual right to obtain options prior to issue
The AAT has held that the taxpayer obtained a contractual right to obtain options in his employer company on 1 July 2003 (the taxpayer having taken up employment with the company in May 2003), and not on 28 November 2003 when the Annual General Meeting of the company approved the issue of options to the taxpayer or, alternatively, 22 December 2003, when the options were actually created and granted to the taxpayer by an option deed of that date.
The date was relevant for the purposes of calculating the amount of the "discount" to be included in the taxpayer's assessable income under s 139CC of Division 13A of ITAA 1936.
The AAT stated at paras 26-29 of its reasons:
"On a proper analysis, the right to acquire ordinary shares includes a right to obtain options which, when exercised, result in the acquisition of ordinary shares. The Tribunal considers that the restrictions advanced by the Commissioner are not warranted by the language of the provisions of Division 13A.
The agreement reached by the parties was that the taxpayer would have the options at the specified strike prices on assuming office, and such a binding agreement was specifically enforceable. The evidence is that he was appointed as Commercial Director on or about 15 May 2003.
The above approach is consistent with commercial realities, having regard to the circumstances in which the taxpayer was placed in May 2003.
For the above reasons, the Tribunal accepts the submission that the right to obtain options is a relevant right within the meaning of s 139B, and is not a form of anterior entitlement which does not come within that provision. The expression 'right' is not limited in its terms and should be given a practical operation."
Taxpayer and FCT  AATA 142 (AAT, Tamberlin QC DP, 7 March 2012).