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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your written advice

Authorisation Number: 1013048350777

Date of advice: 15 July 2016

Ruling

Subject: Employee Share Scheme, start-up concession, beneficial interest

Question 1

For the purposes of satisfying the reporting requirements in Division 392 of the Taxation Administration Act 1953, and determining if the issue of options to a Founder should be reported by Company A under the start-up concession, will the options issued to a Founder satisfy both of the further conditions applicable to the start-up concession in subsection 83A-45(6) of the Income Tax Assessment Act 1997?

Answer

Yes

This ruling applies for the following periods:

28 April 2016 to 30 June 2016

1 July 2016 to 30 June 2017

The scheme commences on:

2016

Relevant facts and circumstances

Some Founders are current directors of Company A.

A Founder is a current employee of Company A.

Employee Share Scheme

Relevant legislative provisions

Income Tax Assessment Act 1936 section 318

Income Tax Assessment Act 1997 Division 83A

Income Tax Assessment Act 1997 section 83A-33

Income Tax Assessment Act 1997 section 83A-45

Income Tax Assessment Act 1997 subsection 83A-45(6)

Income Tax Assessment Act 1997 subsection 83A-45(7)

Income Tax Assessment Act 1997 section 83A-305

Income Tax Assessment Act 1997 section 995-1

Taxation Administration Act 1953 Division 392

Taxation Administration Act 1953 section 392-5

Reasons for decision

RECORD KEEPING OBLIGATIONS - EMPLOYEE SHARE SCHEMES

1. Therefore, in order for a company to fulfil its ESS reporting requirements outlined within Division 392 of the TAA 1953, the company is required to know whether employees participating in an ESS are eligible for the start-up concessions.

EMPLOYEE SHARE SCHEMES

ESS start-up concession

10% limit on shareholding and voting power

Beneficial interest

Ordinary meaning

Associates

Application to your circumstances

Associates

Are any of the Founders associates of one another?

Is Company B an associate of any Founder?

10% limit on beneficial interest - paragraph 83A-45(6)(a)

10% limit on voting power - paragraph 83A-45(6)(b)

Conclusion


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