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ATO Interpretative Decision

ATO ID 2002/569 (Withdrawn)

Income Tax

Employee Share Schemes & Options
FOI status: may be released
  • This ATO ID is withdrawn and is replaced by ATO ID 2006/150
    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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Is a deduction available to the company taxpayer, for the issue of shares, pursuant to section 139DC of the Income Tax Assessment Act 1936 ('ITAA 1936')?

Decision

Yes, a deduction is available to the company taxpayer, for the issue of shares, pursuant to section 139DC of the ITAA 1936.

Facts

The taxpayer has several hundred employees. All permanent employees of the company are entitled to and have been allocated shares. The shares are qualifying shares under section 139CD of the ITAA 1936.

Reasons for Decision

A share is acquired under an Employee Share Scheme, if it is discounted below market value and is in respect of any employment provided by the taxpayer. Subsection 139DC(1) of the ITAA 1936 allows a deduction to a taxpayer who provides certain qualifying shares or qualifying rights.

Subsection 139CD(5) requires that greater than 75% of permanent employees are entitled to acquire shares or rights. All permanent employees of the company are entitled to and have been allocated shares. For the purposes of section 139CD of the ITAA 1936 the shares are qualifying shares.

The provider will be entitled to a deduction pursuant to section 139DC of the ITAA 1936.

Date of decision:  13 March 2002

Year of income:  Year ending 30 June 2002

Legislative References:
Income Tax Assessment Act 1936
   section 139CD
   section 139DC
   subsection 139CD(1)
   subsection 139CD(5)

Keywords
Employee share schemes & options

Business Line:  Private Groups and High Wealth Individuals

Date of publication:  31 May 2002

ISSN: 1445-2782

history
  Date: Version:
  13 March 2002 Original statement
You are here 9 June 2006 Archived

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