| Disclaimer This edited version will be removed from the Database after 30 September 2025. If you believe the issues detailed in this edited version warrant retention in an alternative form, email publicguidance@ato.gov.au This edited version has been archived due to the length of time since original publication.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. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private ruling
Authorisation Number: 1011466033702
This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.
Ruling
Subject: Employee Share Trust
Question 1
Will the contributions of monies by the Employer to the Trustee pursuant to the Trust Deed be included as assessable income of the Employee under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
No
Question 2
Will the contributions of monies by the Employer to the Trustee pursuant to the Trust Deed be included as assessable income of the Employee under section 15-2 of the ITAA 1997?
Answer
No
Question 3
Will the loans of monies by the Employer to the Trustee pursuant to the Trust Deed be included as assessable income of the Employee under section 6-5 of the ITAA 1997?
Answer
No
Question 4
Will the loans of monies by the Employer to the Trustee pursuant to the Trust Deed be included as assessable income of the Employee under section 15-2 of the ITAA 1997?
Answer
No
Question 5
Will the acquisition of Share Units by the Employee in return for payment of market Value consideration be included as assessable income of the Employee under section 83A-25 of the ITAA 1997?
Answer
No
Question 6
Will the issue of the Share Units to the Employee in return for payment of market value consideration, give rise to any assessable income under section 6-5 of the ITAA 1997 for the Employee?
Answer
No
Question 7
Will the issue of the Share Units to the Employee in return for payment of market value consideration, give rise to any assessable income under section 15-2 of the ITAA 1997 for the Employee?
Answer
No
Question 8
Will the first element of the CGT cost base of the Share Units acquired by the Employee, in accordance with section 110-25 of the ITAA 1997, equal the amount paid for those Share Units?
Answer
Yes
Question 9
Will the distribution of dividends included in the calculation of the net income of the trust estate under section 95 of the Income Tax Assessment Act 1936 (ITAA 1936) by the Trustee to the Employee, to which the Employee is presently entitled, be included as assessable income of the Employee under section 97 of the ITAA 1936?
Answer
Yes
Question 10
Will the proceeds received by the Employee upon redemption of the Share Units constitute assessable income under section 6-5 of the ITAA 1997?
Answer
No
Question 11
Will the proceeds received by the Employee upon redemption of the Share Units constitute assessable income under section 15-2 of the ITAA 1997?
Answer
No
Question 12
To the extent that any proceeds received on the redemption of the Share Units constitute assessable income for the Employee under the provisions of section 6-5 or section 15-2 of the ITAA 1997, will the net proceeds (i.e. gross proceeds less the cost of the Share Units) be assessable, rather than the gross proceeds?
Answer
Yes
Question 13
To the extent that the proceeds received on the redemption of the Share Units do not constitute assessable income under section 6-5 or section 15-2 of the ITAA 1997 for the Employee:
will the redemption of the Share Units constitute a CGT event as set out in Division 104 of the ITAA 1997?
Answer
Yes
will the proceeds received by the Employee upon the redemption of the Share Units be taken into account in calculating her net capital gain under Division 102 of the ITAA 1997?
Answer
Yes
will the CGT discount provisions in Division 115 of the ITAA 1997 apply where the Share Units were acquired at least 12 months before the CGT event?
Answer
Yes
Question 14
To the extent that the proceeds from any given redemption of Share Units are included in assessable income under section 6-5 or section 15-2 of the ITAA 1997 and are taken into account in calculating a net capital gain, will the anti-overlap provisions of section 118-20 of the ITAA 1997 operate to reduce the capital gain by the amount included in assessable income or to zero in accordance with subsections 118-20(2) and 118-20(3) of the ITAA 1997?
Answer
Yes
Question 15
If the Share Units are redeemed at a time that coincides with the cessation of the Employee's employment, will the proceeds on redemption be an employment termination payment under section 82-130 of Part 2-40 of the ITAA 1997?
Answer
No
Question 16
Will Bonus Share Units issued to the Employee out of the corpus of the trust and in relation to her holding of Share Units, constitute assessable income under section 6-5 of the ITAA 1997?
Answer
No
Question 17
Will Bonus Share Units issued to the Employee out of the corpus of the trust and in relation to her holding of Share Units, constitute assessable income under section 15-2 of the ITAA 1997?
Answer
No
Question 18
To the extent that the issue of the Bonus Share Units does not constitute assessable income under section 6-5 or section 15-2 of the ITAA 1997 for the Employee:
i) will the provisions of subsection 130-20(3) of the ITAA 1997 apply to deem the Bonus Share Units to have been acquired when the Share Units were acquired and will the cost base be apportioned over both the Share Units and the Bonus Share Units?
Answer
No
ii) will the redemption of the Bonus Share Units constitute a CGT event as set out in section 104-5 of the ITAA 1997?
Answer
No
iii) will the proceeds received by the Employee upon the redemption of the Bonus Share Units be taken into account in calculating her net capital gain under Division 102 of the ITAA 1997?
Answer
No
iv) will the CGT discount provisions in Division 115 of the ITAA 1997 apply to the capital gain made by the Employee in respect of that redemption of the Bonus Share Units where the Bonus Share Units were acquired at least 12 months before the CGT event?
Answer
No
Question 19
If Bonus Share Units are issued to the Employee, and in relation to holding of the Employee's Share Units, at a time that coincides with the cessation of the Employee's employment, will the value of the Bonus Share Units be an employment termination payment under section 82-130 of Part 2-40 of the ITAA 1997?
Answer
No
Question 20
Will the proceeds received by the Employee upon redemption of the Bonus Share Units issued and in relation to the Employee's holdings of Share Units constitute assessable income under section 6-5 of the ITAA 1997?
Answer
Yes
Question 21
Will the proceeds received by the Employee upon redemption of the Bonus Share Units issued and in relation to the Employee's holdings of Share Units constitute assessable income under section 15-2 of the ITAA 1997?
Answer
Yes, to the extent that the proceeds received by the Employee upon redemption of the Bonus Share Units do not constitute assessable income under section 6-5 of the ITAA 1997.
Question 22
To the extent that the proceeds from any given redemption of Bonus Share Units are included in assessable income under section 6-5 or section 15-2 of the ITAA 1997 and are taken into account in calculating a net capital gain, will the anti-overlap provisions of section 118-20 of the ITAA 1997 operate to reduce the capital gain by the amount included in assessable income or to zero in accordance with subsections 118-20(2) and 118-20(3) of the ITAA 1997?
Answer
Yes
Question 24
If the Trustee, pursuant to clause 10.4(i)/11.4(j) of the Trust Deed, decides to pay salary to the Employee on behalf of the Employer, will the amounts paid to the Employee (including any amounts of Pay As You Go instalments withheld) be included as assessable income of the Employee under section 6-5 of the ITAA 1997?
Answer
Yes
This ruling applies for the following periods:
Fringe Benefits Tax Year ending 31 March 2011
Fringe Benefits Tax Year ending 31 March 2012
Fringe Benefits Tax Year ending 31 March 2013
Income Tax Year ending 30 June 2010
Income Tax Year ending 30 June 2011
Income Tax Year ending 30 June 2012
The scheme commences on:
1 July 2009
Relevant legislative provisions
Income Tax Assessment Act 1936 Subsection 44(1)
Income Tax Assessment Act 1936 Division 6
Income Tax Assessment Act 1936 Section 95
Income Tax Assessment Act 1936 Section 97
Income Tax Assessment Act 1936 Division 13A
Income Tax Assessment Act 1936 Section 139B
Income Tax Assessment Act 1936 Subsection 139B(1)
Income Tax Assessment Act 1936 Section 139G
Income Tax Assessment Act 1936 Division 1A
Income Tax Assessment Act 1936 Section 160APHP
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 15-2
Income Tax Assessment Act 1997 Section 82-130
Income Tax Assessment Act 1997 Division 102
Income Tax Assessment Act 1997 Division 104
Income Tax Assessment Act 1997 Section 104-25
Income Tax Assessment Act 1997 Section 110-25
Income Tax Assessment Act 1997 Subsection 110-25(2)
Income Tax Assessment Act 1997 Division 115
Income Tax Assessment Act 1997 Section 118-20
Income Tax Assessment Act 1997 Subsection 118-20(2)
Income Tax Assessment Act 1997 Subsection 118-20(3)
Income Tax Assessment Act 1997 Subdivision 207-B
Income Tax Assessment Act 1997 Section 207-45
Income Tax Assessment Act 1997 Subsection 207-50(3)
Income Tax Assessment Act 1997 Subsection 207-150(1)
Income Tax Assessment Act 1997 Paragraph 207-150(1)(a)
Taxation Administration Act 1953 Section 12-35 of Schedule 1