This Determination, issued on Wed 5.2.2014, states that where real property is acquired following the exercise of a call option, the call option fee does not form part of the “consideration for the acquisition” for the purposes of s 75-10(2) of the GST Act [which states that GST can be imposed on the ‘margin’ land is sold for over ‘cost’]. It includes an example where an individual grants a call option to another entity to purchase land.

DATE OF EFFECT: Applies both before and after its date of issue.

The ATO has withdrawn ATO ID 2004/729 (GST and calculating the margin on a taxable supply of real property after the purchaser exercises a call option and purchases the property) with effect from Wed 5.2.2014 as it has been replaced by GSTD 2014/2.

[LTN 23, 5/2/14]