Senate

Supplementary Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Ralph Willis, MP)

Employee share acquisition schemes

The following amendments and requests for amendment relate to Schedule 6 of the Bill.

Request for amendment 3

This amendment ensures that the valuation provisions of the proposed paragraph 136B(1)(a) of the FBTAA, which values shares or rights quoted on a stock market, apply where there is only one transaction on the stock market on the day. [Item 6]

Request for amendment 4

This amendment provides for two further methods of valuing shares or rights which are quoted on a stock market but which cannot be valued under the methods currently set out in the proposed paragraph 136B(1)(a) of the FBTAA. [Item 6]

Requests for amendment 5 and 6

These amendments remove the concessional deduction which was to be allowed under the proposed subsection 76(1) of the Income Tax Assessment Act 1936 (ITAA) in respect of the section 39FG concession (the deferral concession). [Item 14]

Amendment 1

This amendment increases the section 39FG concession amount (the deferral concession amount) from $1500 to $5000. [Item 2]

Amendment 2

This amendment ensures that the limiting conditions of non-discrimination, vesting, and minimum disposal period (previously contained in the proposed paragraph 39FI(f) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) but removed by amendments 5, 6, and 7) continue to apply to the section 39FF concession (the exemption concession). [Item 2]

Amendment 3

This amendment adds a limiting condition to the section 39FG concession (the deferral concession) so that the concession will only apply to ordinary employee share fringe benefits where each employee is, or was at some earlier time, entitled to acquire shares or rights in the current employer or holding company of the current employer. It is not necessary, in these cases, that the earlier acquisition scheme be operated only by the current employer or that the employee was employed by the current employer at the time. [Item 2]

Amendment 4

This is a technical amendment which arises a result of amendments 5, 6 and 7. [Item 2]

Amendment 5

This amendment removes the limiting condition of the proposed subparagraph 39FI(f)(i) of the FBTAA which required that, before either the 39FF concession (the exemption concession) or the 39FG concession (the deferral concession) could be claimed, both the acquisition scheme and any financial assistance scheme be non-discriminatory. However, amendment 2 ensures that this limiting condition continues to apply to the section 39FF concession (the exemption concession). [Item 2]

Amendment 6

This amendment removes the limiting condition of the proposed subparagraph 39FI(f)(iv) of the FBTAA which required that, before either the 39FF concession (the exemption concession) or the 39FG concession (the deferral concession) could be claimed, the acquisition scheme did not have any conditions that could result in the shares or rights being forfeited. However, amendment 2 ensures that this limiting condition continues to apply to the section 39FF concession (the exemption concession). [Item 2]

Amendment 7

This amendment removes the limiting condition of the proposed subparagraph 39FI(f)(v) of the FBTAA which required that, for either the 39FF concession (the exemption concession) or the 39FG concession (the deferral concession) to be claimed, the disposal of any shares or rights could not generally occur within 5 years of acquisition. However, amendment 2 ensures that this limiting condition continues to apply to the section 39FF concession (the exemption concession). [Item 2]

Amendment 8

This amendment changes the definition of 'permanent employee' in the proposed subsection 39FL(1) of the FBTAA so that a full-time or permanent part-time employee needs at least 24 months service to qualify as a permanent employee. [Item 2]

Amendment 9

This amendment changes the previously proposed definition of 'approved stock exchange' in subsection 136(1) of the FBTAA to extend its meaning to include the Australian Stock Exchange Ltd and certain overseas stock exchanges. [Item 5]