• Indeterminate rights

    At the time of acquisition of a right by an employee, the entitlement to a share or a specific number of shares could be uncertain.

    For example, you could provide your employee with a right to acquire, at a future time:

    • either shares or cash (whichever you decide)
    • shares with a specified total value, rather than a specified number of shares, or
    • an indeterminate number of shares - the exact number of shares is not specified at the time the employee acquires the right.

    The indeterminate right will be taken as having always been a right to acquire shares if and when it becomes clear that the right will result in the receipt of:

    • shares, where previously it could have been shares or cash
    • a definite number of shares, where previously it was shares to a total value or an unspecified number or shares.

    Your reporting responsibilities to your employee differ depending on when the right to an employment benefit was acquired and when that right becomes rights to shares.

    Taxed-upfront scheme

    If the right becomes a right to acquire shares under a taxed-upfront scheme:

    • in the financial year the employee acquired the right, you must give the information to the employee in an ESS statement by 14 July and give us an ESS annual report by 14 August after the end of the financial year
    • after the financial year that the employee acquired the right, you must give the employee an amended ESS statement and give us an ESS annual report (with original or amended employee records as the case may be) for the acquisition year within 30 days of the rights becoming rights to shares.

    Tax-deferred scheme

    If the right becomes a right to acquire shares under a tax-deferred scheme and the deferred taxing point occurs:

    • in a financial year before the rights become rights to shares you must        
      • give the employee an amended ESS statement for the year that the deferred taxing point occurred, within 30 days of the rights becoming rights to shares
      • give us an ESS annual report (with original or amended employee records as the case may be) for the year that the deferred taxing point occurred, within 30 days of the rights becoming rights to shares
       
    • during the financial year that the rights become rights to shares you must        
      • give the employee information on the rights in their ESS statement by 14 July after the end of the financial year
      • give us information on the rights in the ESS annual report by 14 August after the end of the financial year
       
    • after the financial year that the rights become rights to shares, you must         
      • give the employee information on the rights in their ESS statement for the year that the deferred taxing point occurs
      • give us information on the rights in the ESS annual report for the year that the deferred taxing point occurs.
       

    Transitioned rights

    You must provide an ESS statement to your employee and an ESS annual report to us for the financial year that the possible cessation time occurs if both:

    • your employee acquired a right before 1 July 2009 that, after 30 June 2009, becomes rights to shares that are qualifying
    • a possible cessation time happens to those rights (whether or not the employee made an election).

    There is no reporting requirement if the rights are not qualifying or if the cessation time for the rights occurred before 1 July 2009.

    See also:

      Last modified: 12 Jul 2016QC 23058