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Edited version of your private ruling
Authorisation Number: 1012568938898
Ruling
Subject: Employee share scheme - Deferred taxing point - Termination of employment
Question: Can the tax on your company A options be deferred until they vest or otherwise in 2015?
Answer:
No.
This ruling applies for the following period<s>:
2012-13 income year
2014-15 income year
The scheme commences on:
1 July 2010
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You were formerly an employee of company A and ceased employment with them in late 20XX.
You have unvested options to acquire shares that were originally issued to you by company A in late 20YY. These options have become taxable in the 2012-13 income year due to the termination of your employment.
You wish to defer the tax on these companies A options until they vest or otherwise in 20ZZ because:
· None of the company A options issued under their Long Term Incentive Plan in the last few yaers have vested, and
· You are now a full time student, and will continue to be for the calendar years 20WW and 20YY. Not only do these options materially impact your income tax return in the 2012-13 income year, but should they not vest in 20ZZ, you will have no taxable income in that year to offset the tax paid on the options in the 2012-13 income year.
Certain documents were provided with the private ruling request. They are to be read with and forms part of the description of the scheme for the purpose of this ruling.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 83A,
Income Tax Assessment Act 1997 Section 83A-110 and
Income Tax Assessment Act 1997 Section 83A-120.
Reasons for decision
Summary
The tax on your company A options cannot be deferred until they vest or otherwise in 20ZZ.
Detailed reasoning
Options to acquire shares form part of your remuneration if the options are granted to you in relation to your employment and at a discount to their market value.
The employee share scheme provisions are used to work out:
· When you need to include this discount in your assessable income, and
· The amount of the discount.
Options that meet certain conditions are taxable at the 'ESS deferred taxing point'.
In your case, the ESS deferred taxing point occurred due to the termination of your employment.
The Commissioner does not have any discretion to change the ESS deferred taxing point or to allow you to declare the discount that you receive on these options in a later income year.
Please note: you will be entitled to amend your income tax return for the 2012-13 income year to remove the discount from your assessable income if the options do not vest and they are forfeited in 20ZZ. There is no time limit for this amendment.