Edited version of your private ruling

Authorisation Number: 1012141490873

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. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.

Ruling

Subject: Employee share scheme - Ceased employment - Deferred Taxing Point

The deferred taxing point used by your employer is correct as the legislation states that the date should be the earliest of the listed events if the shares are not free of restrictions or the risk of forfeiture. In this case the earliest point is when you ceased employment.

Question 1

Is the deferred taxing point date for Label G correct?

Answer

Yes.

Question 2

Is the deferred taxing point date for Label F correct?

Answer

Yes.

This ruling applies for the following periods:

Period ended 30 June 2011.

The schemes commences on:

1 July 2008

Relevant facts

When you left your employment this date has been used to calculate the deferred taxing point on your Plan Tax Statement for Labels G and F.

Relevant legislative provisions

Income Tax Assessment Act 1936 Division 13A

Income Tax Assessment Act 1997 Division 83A

Question 1

Summary

The deferred taxing point used by your employer for Label G is correct as the legislation states that the date should be the earliest of the times in subsection 139CA(2) Income Tax Assessment Act (ITAA)1936 if the shares are not free of restrictions or the risk of forfeiture.

Detailed reasoning

The remuneration that you receive in your employment can take forms other than cash including the provision of shares or rights to acquire shares to you at a discount to their market value.

The scheme for Label G of the Deferred Share Plan Tax Statement commenced before 1 July 2009 therefore the employee share scheme (ESS) legislation that applies is division 13A of the ITAA 1936.

Division 13A of the ITAA 1936 applied until 30 June 2009. Some of these former rules continue to apply past 30 June 2009 to shares and rights to acquire shares granted before 1 July 2009 (called transitioned shares and rights). One of these is the method of working out the deferred taxing point (called the cessation time by Division 13A of the ITAA 1936).

Subsection 139CA(2) of the ITAA 1936 defined the cessation time of shares that had selling restrictions or forfeiture conditions to be the earliest of the following:

· when you dispose of the share

· the later of:

· when any selling restrictions end, and

· when any forfeiture conditions end

· when the employment in respect of which you acquired the share ends, and

· ten years from the date of acquisition

Your situation

Two potential cessation times have happened for your shares at label G. They are:

· the selling restrictions on the label G shares ending, and

· your employment ending

The earlier of these two cessation times was the ending of your employment; therefore this is your cessation time for the shares at label G.

Question 2

The deferred taxing point used by your employer for Label F is correct as the legislation states that the date should be the earliest of the times in subsection 83A-115(2) Income Tax Assessment Act (ITAA) 1997 if the shares are not free of restrictions or the risk of forfeiture.

Detailed reasoning

The scheme for Label G of the Deferred Share Plan Tax Statement commenced after 1 July 2009 therefore the ESS legislation that applies is Division 83A of the ITAA 1997.

Division 83A of the ITAA 1997 applies to shares and rights to acquire shares that are granted after 1 July 2009 and also to shares and rights granted before 1 July 2009 that were subject to income tax deferral past this date.

Subsection 83A-115(2) of the ITAA 1997 defines the deferred taxing point of shares that had selling restrictions and forfeiture conditions to be the earliest of the following:

No restrictions on disposing of share 83A- 115(4) the first possible taxing point is the earliest time when:

· there is no real risk that, under the conditions of the ESS, you will forfeit or lose the ESS interest (other than by disposing of it); and

· if, at the time you acquired the interest, the scheme genuinely restricted you immediately disposing of the interest - the scheme no longer so restricts you.

Cessation of employment

83A- 115(5) the 2nd possible taxing point is the time when the employment in respect of which you acquired the interest ends.

Maximum time period for deferral

83A- 115(6) the 3rd possible taxing point is the end of the 7 year period starting when you acquired the interest.

Your situation

The possible deferred taxing points for your shares at label F are:

· the selling restrictions on shares label F ending, and

· your employment ending.

The earlier of these two deferred taxing points would be the ending of your employment; therefore this is your deferred taxing point for the shares at label F.

You have received an ESS statement from your employer stating that the deferred taxing point for your shares happened due to your employment ending for labels G and F. Their conclusion is in accord with the above legislation.