Income Tax Act 2007 section 779

Income arising where derivative property or right obtained

Section 779 deals with the income tax charge that arises when an individual obtains property or a right that derives substantially all of its value from that individual's activities, and that property or right is subsequently sold or realised.

• This section applies where the capital amount received (as described in section 777) takes the form of property or a right whose value derives substantially from the individual's own activities
• The charge applies regardless of whether the capital amount is obtained on a single occasion or across multiple occasions, such as when a stock option is first acquired and later exercised
• When the property or right is sold or otherwise realised, the full proceeds are treated as income of the individual for income tax purposes
• The income is treated as arising in the tax year in which the sale or realisation takes place