1051999717406 | Legal database

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Edited version of private advice

Authorisation Number: 1051999717406

Date of advice: 29 June 2022

Ruling

Subject: CGT - foreign resident

Question

Is any capital gain or capital loss you make in relation to the sale of the resulting shares disregarded?

Answer

Yes. You will exercise the ESS options after you have left Australia and will dispose of the resulting shares while you are a foreign resident.

As the shares will not be taxable Australian property, and you will be a foreign resident when they are sold, you will be able to disregard any capital gain or capital loss made on their disposal under section 855-10 of the Income Tax Assessment Act 1997?

This ruling applies for the following periods:

Income year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are a citizen of Country A.

You were granted a Temporary Work (Skilled) (subclass 457) visa and arrived in Australia as a temporary resident of Australia for taxation purposes.

You were employed by Company X soon after your arrival in Australia.

You received a letter of offer from Company X to participate in their employee share scheme (ESS) which qualified for the ESS start-up concessions.

You were granted options under the ESS for no consideration, with a specified exercise price and vesting schedule for the options.

Your options represented less than 10% of Company X's shares are not taxable Australian property.

You did not obtain permanent residency in Australia and were not an Australian resident within the meaning of the Social Security Act 1991.

You did not have a spouse.

Your employment with Company X ended and you were allowed to retain your options.

You departed Australia permanently as a temporary resident soon after your employment ended to return to Country A.

Your temporary visa was cancelled after you had arrived in Country A.

You will exercise the options after you have left Australia.

For the purposes of this ruling, you will dispose of the resulting shares arising from the exercising of the options during the period covered by this ruling, while you are a non-resident of Australia.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subdivision 83A-B

Income Tax Assessment Act 1997 Section 83A-33

Income Tax Assessment Act 1997 Section 768-915

Income Tax Assessment Act 1997 Division 855

Income Tax Assessment Act 1997 Section 995-1

Income Tax Assessment Act 1997 Part 3-1

Income Tax Assessment Act 1997 Part 3-3

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