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Edited version of private ruling
Authorisation Number: 1011515437163
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Ruling
Subject: Employee Share Scheme - Date liability of tax payable
Question
Are you liable to pay tax on your performance shares at the reporting/vesting dates?
Answers
Yes.
This ruling applies for the following period
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
The scheme commenced on
1 July 2008
Relevant facts
You were employed by Company X and you were a participant in the Company X Employee Long Term Incentive Plan (LTIP).
You were granted options (rights) under the LTIP.
The granting of these rights are subject to certain conditions being met.
You were granted rights on a number of consecutive years:
You paid nothing to acquire these rights.
You have not exercised any of the rights that were granted more than five years ago.
You ceased employment with Company X a few years ago.
You have provided copies of the following documentation to support your application and these documents are to be read with and forms part of the scheme for the purpose of this ruling:
- Company X Long Term Incentive Plan.
- Company X Long Term Incentive Plan (LTIP) Performance Shares granted as options - Australian Tax Summary.
- The relevant class ruling.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 139B
Income Tax Assessment Act 1936 Section 139G
Income Tax Assessment Act 1936 Section 139CA
Income Tax Assessment Act 1936 Section 139C
Reasons for decision
Acquisition of rights
An individual acquires a right under an employee share scheme if the right is acquired by the individual in respect of, or for or in relation directly or indirectly to, any employment of the individual or an associate of the individual.
The relevant class ruling deals with rights granted under a plan where performance hurdles are required to be met before the rights are granted.
Under the class ruling the participating employees will acquire their rights under an employee share scheme for the purpose of Division 13A is on the reporting date.
The discount given in relation to the rights acquired is included in an individual's assessable income in the year of income in which the rights are acquired.
Participating employees are advised on the reporting date whether the performance hurdles of their rights have been satisfied and are considered to have acquired a right under an employee shares scheme, but not before, the reporting date as it is at that time that Company X creates a right.
Even though you ceased employment with Company X several years ago, under the LTIP you retained a number of rights and these rights are subject to performance hurdles.
Therefore, you will be taken to have acquired your rights on each of the reporting dates for your various rights granted to you.