Put and call option deed nsw
For example, an Option Agreement may provide that:. There can be adverse tax consequences of utilising a large non-refundable option fee, so it is imperative that consideration is given to the capital gains tax and GST treatment of option fees before the Option Agreement is entered into. There can also be the risk that the arrangement constitutes an instalment contract read more about those here if it is not properly prepared. Where an Option Agreement is intended to be more mutually beneficial or grants both parties the right to compel the other to buy or sell respectively , it is more common for the Option Fee to be a nominal amount i.
This may avoid some adverse tax and duty consequences. Option Agreements may have set time frames during which a party may exercise its option, or otherwise the option periods can be triggered by certain events for example, the Buyer obtaining a development approval. Option Agreements can also allow for the asset to be sold to another party on exercise of the option.
This can be useful where the buyer has not yet determined or established the legal entity that is to acquire the asset. In summary, Option Agreements have a wide range of uses and may offer benefits over a sale contract alone, however there are a number of significant legal and tax issues that will need to be considered. Sale contracts and option agreements each have their limitations and you should always seek advice before entering into an arrangement concerning real property. We have extensive experience in this area.
Skip to content Property Development. What are the Different Options? Put Option — this is where the seller has the right to compel a buyer to buy the Property. Call Option — this is where the buyer has the right to compel a seller to sell the Property. Put and Call Option — this may grant both parties the right to compel the other to buy or sell the Property. Usually these options would run consecutively — the call option first, and then the put option kicks in after the first option has expired.
How does it work? An Option Agreement usually contains two main parts: However, in this case C will receive a credit for the duty paid by C on the transfer of the option to C. D as the transferee of the option is required to pay duty on the transfer. Transfer duty Stamp duty Calculate dutiable value Lodging for assessment Pay your transfer duty Transfer of options to purchase land Exemptions and concessions Forms and factsheets Frequent questions.
Transfer of options to purchase land. Also, a transfer is taken to occur if an option holder, for valuable consideration: Who pays the duty? When am I liable for the duty? Where there is a nomination or novation, the liability date is: When must the duty be paid? Duty must be paid within 3 months after the liability arises. How is duty calculated? No duty is payable on the grant of the option to Purchaser A. The amount of duty is to be reduced by the amount of duty paid by Purchaser B on the earlier nomination.
Example 1 A grants B a call option that confers a right on B or any assignee of B to require A to sell land. B then transfers the call option to C. Duty is payable as follows: B as the option holder must pay call option assignment duty as if the transfer of the option were a transfer of the land. Duty is payable on the dutiable value of the land, C as the transferee of the option must pay duty on the transfer of the option. Duty is payable on the dutiable value of the option being transferred.
No duty is payable on the grant of the put and call option.