Income Tax Assessment Act 1997



Division 130 - Investments  

Subdivision 130-D - Employee share schemes  

SECTION 130-85   Interests in employee share trusts  


This section applies if:

(a) you *acquire an *ESS interest under an *employee share scheme; and

(b) Subdivision 83A-B or 83A-C applies to the ESS interest; and

(c) the ESS interest is, or arises because of, an interest you hold in an *employee share trust.

Application of Division 83A, Part 3-1 and this Part

Division 83A (Employee share schemes), Part 3-1 (Capital gains and losses: general topics) and this Part apply as if you were absolutely entitled to the relevant *share or right:

(a) from the time of acquisition of the *ESS interest; and

(b) until you no longer have an ESS interest in the share or right.

Note 1:

An interest you hold in an employee share trust may give rise to an ESS interest because of the operation of section 83A-320 .

Note 2:

As a result of subsection (2) of this section, CGT event E5 might happen at the time of acquisition. This may result in the trustee making a capital gain. However, any capital gain made by the beneficiary would be disregarded under section 130-80 .


However, if this section applies to you because an *associate of yours *acquired the *ESS interest, Division 83A , this Part and Part 3-3 apply as if your associate were absolutely entitled to the relevant *share or right (instead of you):

(a) either:

(i) if Subdivision 83A-B applies to the ESS interest - from the time of acquisition; or

(ii) if Subdivision 83A-C applies to the ESS interest - from immediately after the *ESS deferred taxing point for the ESS interest; and

(b) until your associate no longer has an ESS interest in the share or right.


Once the ESS interest has been taxed to you under Subdivision 83A-B or 83A-C , section 83A-305 (which treats the interest as having been acquired by you, rather than your associate) is no longer relevant. Subsection (3) of this section ensures that your associate then gets the same tax treatment as you would have, had you originally acquired the interest. This does not, however, imply a disposal from you to your associate.

Meaning of employee share trust


An employee share trust , for an *employee share scheme, is a trust whose sole activities are:

(a) obtaining *shares or rights in a company; and

(b) ensuring that *ESS interests in the company that are beneficial interests in those shares or rights are provided under the employee share scheme to employees, or to *associates of employees, of:

(i) the company; or

(ii) a *subsidiary of the company; and

(c) other activities that are merely incidental to the activities mentioned in paragraphs (a) and (b).

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