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Edited version of private ruling

Authorisation Number: 1011573498762

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Ruling

Subject: Employee share scheme - reduction of amounts included in assessable income

Question 1

Are you eligible to reduce the assessable discount on your 2008/09 award of employee shares by $1,000?

Answers

No.

Question 2

Are you eligible to reduce the assessable discount on your 2009/10 award of employee shares by $1,000?

Answers

No.

This ruling applies for the following periods:

1 July 2008 - 30 June 2009

1 July 2009 - 30 June 2010

The scheme commenced on:

1 July 2008

Relevant facts and circumstances

You joined your employers general employee stock purchase plan several years ago and have participated in it ever since.

You made an election to be taxed upfront on the discount in your 2008/09 income tax return.

You acquired ordinary shares under the employee share scheme.

All permanent employees are eligible to participate in the share scheme.

You do not hold more than 5% of the shares in the company and you are not in a position to cast, or to control the casting of, more than 5% of the maximum number of votes that might be cast at a general meeting of the company.

There is no risk that, under the conditions of the scheme, you will forfeit or lose the Employee share scheme interest.

There is a minimum holding period of 12 months, before you can sell the shares.

Your taxable income after adjustments for the 2009/10 income tax year will not exceed $180,000.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 139BA,

Income Tax Assessment Act 1936 Section 139CE and

Income Tax Assessment Act 1997 Section 83A-35.

Reasons for decision

The tax rules for shares or rights (ESS interests) acquired under an employee share scheme have recently changed and new rules apply from 1 July 2009.

Therefore due to the changes your ESS interests acquired before 1 July 2009 and your ESS interests acquired after 30 June 2009 fall under different provisions and need to be individually addressed.

2008/09 employee share scheme

Employee share scheme interests (ESS interests) acquired before 1 July 2009 will only qualify for the $1,000 reduction if you have elected to be assessed on the discount of the ESS interests upfront and if the employee share scheme, from which you acquire the ESS interests, meets the following conditions:

In your case, you are permitted to dispose of the shares 12 months after the date of acquisition. Therefore, your 2008/09 ESS interests do not qualify for the $1,000 reduction.

2009/10 employee share scheme

ESS interests acquired after 30 June 2009 will only qualify for the $1,000 reduction if, you have participated in a taxed-upfront scheme and the employee share scheme, from which you acquire the ESS interests, meets the following conditions:

Furthermore the following must also apply:

You do not hold more than 5% ownership of the company, or control more than 5% of the voting rights in the company after acquiring the ESS interests.

In your case, you are permitted to dispose of the shares 12 months after the date of acquisition. Therefore, your 2009/10 ESS interests do not qualify for the $1,000 reduction.

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