Edited version of private ruling

Authorisation Number: 1011744690023

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Ruling

Subject: Employee Share Scheme - Sale of shares - Cost base

Question 1

Can you use the cost base belonging to your ESS 'matched shares' for the 'acquired shares' sold from your Computershare account?

Answer

No.

This ruling applies for the following period

Year ended 30 June 2010.

The scheme commences on:

1 July 2009.

Relevant facts and circumstances

You are employed by a certain company.

You participated in your employer's Employee Share Scheme (ESS).

A feature of the ESS is that contributions are deducted from your after tax salary and paid to a plan administrator, who then uses the contributions to purchase shares (in your employer company), 'acquired shares' on your behalf at market value each quarter. 'Acquired shares' are not purchased at a discount. 'Acquired shares' are held in your own name and maintained in your own Computershare account with a separate Securityholder Reference Number (SRN).

Under the ESS, your employer awards participants at nil cost, shares known as 'matched shares' on a one for one basis to the number of 'acquired shares' held by the participant at the end of the holding period, (three years from acquisition of the 'acquired share'), provided the participant is still employed. 'Matched shares' are acquired at a discount, are held in a separate account to 'acquired shares' and have a separate SRN.

You were allocated a certain number of 'matched shares' on a certain date.

You sold 'acquired shares' from your own Computershare account sometime during the year ended 30 June 2010.

You have included copies of, or website links to the following documents which are to be read with and form part of the scheme for the purpose of this private binding ruling:

· Your employer's - Annual Employee Share Scheme Tax Statement Summary - 1 July 2009 to 30 June 2010;

· Your Employee Share Scheme information guide;

· ESS - supporting document and information requirements for private rulings; and

· Sale of shares - supporting document requirements for private rulings

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 104-10 and

Income Tax Assessment Act 1997 Section 110-25.

Reasons for decision

Question 1

You cannot use the cost base belonging to your ESS 'matched shares' for the 'acquired shares' sold from your Computershare account.

CGT Determination Number 33 (TD 33) states at paragraph one the following:

"Where a disposal of shares occurs and those shares are able to be individually distinguished e.g. by reference to share numbers or other distinctive rights or obligations attached to them, those shares are identifiable; their date of acquisition and cost base will be a matter of fact."

You have no discretion in determining which of the shares in your employer company that you sold; it is a matter of fact. The shares in your employer company that you sold during the financial year ended 30 June 2010 were 'acquired shares', sold from your own identifiable Computershare account, therefore you cannot substitute their cost base with the cost base belonging to your 'matched shares'.