Employee share schemes - answers to frequently asked questions by employees

8. Can shares or rights that my associate acquires under an employee share scheme be qualifying shares or rights?

No. To be a qualifying share or right, one of the requirements is that the company, in which the shares or rights are issued, is the employer of the person who acquires the shares or rights (or is the holding company of the person's employer).

If your associate acquires the shares or rights in relation to your employment or services and is not an employee of the company or holding company issuing the share or right, the shares or rights will not be qualifying shares or rights.

This means that you, as the person required by law to include the discount in your assessable income, must include the discount in the income year in which you acquire the shares or rights.

Example 6 - rights acquired in relation to associate's employment

Following on from example 3, Sally acquires 700 rights in relation to her spouse, Derek's employment. These rights are not qualifying rights as Sally is not an employee of D2D Finance Company. As a result, Derek includes the discount on the 700 rights in the income year that Sally acquires the rights, which is the 2008 income year.

Sections within Questions about qualifying shares or rights

• 7. What is a qualifying share or qualifying right?
• 8. Can shares or rights that my associate acquires under an employee share scheme be qualifying shares or rights?
• 9. What are the two concessions that may be available for qualifying shares and rights?