• Lapsed and forfeited employee share scheme interests

    You may be entitled to exclude the discount from your assessable income and receive a refund of taxes paid if you received a discount under an employee share scheme (ESS) and included it in your assessable income:

    • for shares, stapled securities or rights to acquire shares or stapled securities (ESS interests) and your interests are subsequently forfeited
    • for a right that has been forfeited, lapsed, expired or lost (without the right having been disposed of or exercised).

    ESS interests acquired after 30 June 2009

    ESS interests acquired between 1 July 2009 and 30 June 2015

    For ESS interests acquired between 1 July 2009 and 30 June 2015, a refund is available only where:

    • the conditions of the scheme did not directly protect you (the employee) from a fall in the market value of the interest (market risk)
    • you had no choice but to forfeit or lose the ESS interests (except when the choice was to cease employment).

    We may not consider you to forfeit or lose your ESS interests if you receive valuable consideration for no longer holding the interest.

    You may request an amendment of your assessment to exclude the discount previously included in your assessable income. There is no time limit for amending an assessment to exclude an amount from assessable income for an ESS interest which is forfeited or lost.

    Where a refund is not available, you may be able to claim a capital loss under the capital gains tax provisions.

    ESS interests acquired from 1 July 2015

    For ESS interests acquired from 1 July 2015, a refund is available where:

    • the conditions of the scheme did not directly protect you (the employee) from a fall in the market value of the interest (market risk), and
    • the forfeiture or loss was not the result of a choice you made, except where the choice was:
      • to cease employment, or
      • where the ESS interest is a right, not to exercise the right before it lapsed or to allow the right to be cancelled.

    We may not consider you to forfeit or lose your ESS interests if you receive valuable consideration for no longer holding the interest.

    If you are entitled to exclude the discount, you are treated as never having acquired your ESS interests. You may request an amendment of your assessment to exclude the discount previously included in your assessable income. There is no time limit for amending an assessment to exclude an amount from assessable income for an ESS interest which is forfeited or lost.

    Where a refund is not available, you may be able to claim a capital loss under the capital gains tax provisions.

    ESS interests acquired by an associate

    If an associate acquires ESS interests, which are provided in relation to your employment or services, the ESS rules require you (rather than your associate) to include the discount in your assessable income. Associates can include a spouse, child, company or trustee of a trust (other than the trustee of an employee share trust).

    If you have included a discount in your assessable income for the ESS interests and the ESS interests are subsequently forfeited or lost, you will be entitled to exclude the discount from your assessable income (rather than the assessable income of your associate), provided the conditions for obtaining a refund are met.

      Last modified: 01 Jul 2015QC 27244