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ATO Interpretative Decision

ATO ID 2002/961

Income Tax

Income Tax: employer costs for the purpose of administering its employee share scheme are deductible
FOI status: may be released

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  • This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Will costs incurred by the taxpayer company in implementing and administering the Employee Share Scheme be deductible under section 8-1 of the Income Tax Assessment Act 1997 ('ITAA 1997')?

Decision

Yes. The costs incurred by the taxpayer company in implementing and administering its employee share scheme will be deductible under section 8-1 of the ITAA 1997.

Facts

The Scheme is an Employee Share Scheme which complies with the provisions of Division 13A of the Income Tax Assessment Act 1936 ('ITAA 1936').

A Trustee is appointed to administer the Scheme. The taxpayer incurs costs of operating the scheme. These costs include brokerage fees, audit fees, bank charges and other ongoing administrative expenses necessarily incurred in running the scheme.

Reasons for Decision

The operating costs associated with the administration and implementation of the employee share plan are part of the ordinary employee remuneration costs of the taxpayer. Accordingly they are deductible under section 8-1 of the ITAA 1997 in the year that they are incurred.

Date of decision:  30 July 2002

Year of income:  Year ended 30 June 2002 Year ending 30 June 2003 Year ending 30 June 2004

Legislative References:
Income Tax Assessment Act 1997
   section 8-1

Related ATO Interpretative Decisions
ATO ID 2002/966
ATO ID 2002/968

Keywords
Deductions
Employee share schemes & options
Share discounts on employee share schemes

Business Line:  Private Groups and High Wealth Individuals

Date of publication:  2 October 2002

ISSN: 1445-2782

history
  Date: Version:
You are here 30 July 2002 Original statement
  23 December 2014 Archived

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