Edited version of private ruling

Authorisation Number: 1011658167215

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.

Subject: Employee share scheme (ESS) - discount - mature aged worker tax offset - net income from working

Will a total assessable discount amount recorded at Label 12B be included in your net income from working when determining your eligibility to the mature aged worker tax offset?

Yes.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

1 July 2009

Relevant facts

You were granted a number of employee shares or options in relation to your employment.

You lodged your income tax return in which you recorded amounts for salary and discounts from your employee shares or options.

A notice of assessment was issued, which stated that the mature aged workers tax offset had been disallowed because your net income from working had been too high.

Relevant legislative provisions

Income Tax Assessment Act 1936 Section 139B

Income Tax (Transitional Provisions) Act 1997 Subdivision 83 A-B

Income Tax (Transitional Provisions) Act 1997 Section 83A-10

Income Tax Assessment Act 1997 Section 61-560.

Income Tax Assessment Act 1997 Section 61-570

Income Tax Assessment Act 1997 Division 83A

Income Tax Assessment Act 1997 Section 84-5

Reasons for decision

Taxpayers are entitled to a mature age worker tax offset for an income year if they are an Australian resident individual who is aged 55 or over at the end of the income year. However, the amount of the tax offset is nil if you have no net income from working or your net income from working is over $63,000 in the income year.

Your net income from working for an income year is the sum of the following amounts.

(a) Your assessable income for the year to the extent that it consists of the following:

I) personal services income

II) assessable income from a business you carry on

III) an amount included under section 393-10 of the Income Tax Assessment Act 1997 (ITAA 1997) , as a result of the repayment of a farm management deposit

less the sum of any amounts you can deduct for the year to the extent that they relate to assessable income mentioned in subparagraph (a)(i) or (ii).

Section 84-5 of the ITAA 1997 defines personal services income as:

Your ordinary income or statutory income, or the ordinary income or statutory income of any other entity, is your personal services income if the income is mainly a reward for your personal efforts or skills (or would mainly be such a reward if it was your income).

In your case, the employee share discount amounts included in your assessable income are statutory income. The ESS interests were provided in relation to your employment, mainly as a reward for your personal efforts or skills. Given this, the employee share discounts are included as personal services income, and are included in your net income from working. As your net income from working exceeds $63,000, you are not eligible for the mature aged workers tax offset.

Please find enclosed the following fact sheet to assist you with any further issues you have in determining amounts to be included in your net income from working:

Mature age worker tax offset - overview. Guidance on the amounts used to calculate the net income from working is provided on page 4.