Edited version of private advice

Authorisation Number: 1051858656942

Date of advice: 29 October 2021

Ruling

Subject: Employee share scheme

Question 1

Will Company A as head entity of the Company A income tax consolidated group (TCG) be entitled to an income tax deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for the amount recharged and invoiced by Company B in respect of Company C's share of the irretrievable cash contributions made by Company B to Trustee of the Company B Employee Share Trust (the Trust) to fund the subscription for, or acquisition on-market of, Company B's shares (Shares) to satisfy awards issued to the eligible employees of Company C, pursuant to the Company B Long Term Plan (the LTP) and the Company B Employee Share Plan (the Company B Employee Share Plan), collectively referred to as 'the Plans'?

Answer

Yes

Question 2

Will the Commissioner make a determination that Part IVA of the Income Tax Assessment Act 1936 (ITAA 1936) applies to deny, in part or in full, any deduction claimed by Company A for the amount recharged and invoiced by Company B in respect of Company C's share of the irretrievable cash contributions made to the Trustee to fund the subscription for, or acquisition on-market of, Shares for Company C's eligible employees, pursuant to the Plans?

Answer

No

Question 3

Will the amount recharged and invoiced by Company B in respect of Company C's share of the irretrievable cash contributions made by Company B to the Trustee to fund the subscription for, or acquisition on-market of, Shares in respect of employees of Company C constitute a fringe benefit within the meaning of subsection 136(1) of the Fringe Benefit Tax Assessment Act 1986 (FBTAA)?

Answer

No

Question 4

Will the provision of Awards to the employees of Company C under the relevant Plans constitute a fringe benefit within the meaning of subsection 136(1) of the FBTAA?

Answer

No

Question 5

Will the Commissioner seek to apply section 67 of the FBTAA to the arrangement where ESS interests are provided to employees at a discount?

Answer

No

Relevant facts and circumstances

Company A and Company C

Company A is a company incorporated and tax resident in Australia. Company A is a direct wholly-owned subsidiary of Company B and the head company of the Company A tax consolidated group (TCG).

Company C is a company incorporated and tax resident in Australia. Company C is a subsidiary member of the Company A TCG and the employing entity for the Company A TCG.

Company B

Company B is a for-profit entity incorporated and tax resident in a foreign jurisdiction.

Company B is also registered as a foreign company in Australia under the Corporations Act 2001.

The Shares of Company B are publicly traded on a foreign Stock Exchange and the Australian Securities Exchange.

The Shares are interchangeable and only one share register is maintained for Company B.

Company B is the parent entity of the global group, composed of Company B and its wholly owned subsidiaries (the Company Group).

The Company Group is in the business of producing, marketing and selling products in targeted global markets.

As part of the strategy to reward, retain and motivate the employees, executives and directors of the Company Group (Participants) and to align their interests with those of shareholders, Company B offers a number of employee share scheme (ESS) under the Plans.

The LTP was established to assist in the reward and retention of selected senior executives and managers by providing them an equity interest in the company by offers of performance rights and time-based rights (Rights).

Company B established the Company B Employee Share Plan (ESP) which offered the Share Gift Plan and the Share Match Plan, only to those employees not eligible to participate in the LTP.

The Rights issued under the LTP and Shares issued under the ESP are also referred to as 'Awards'.

The Plans

The LTP

The LTP was established to:

•                    Assist in the reward and retention of selected senior executives and managers

•                    Link the rewards available to senior executives and managers to shareholder value creation, and

•                    Align the interests of senior executives, managers and shareholders by providing senior executives and managers with an equity interest in the Company.

The LTP is governed by the LTP Rules.

Participation in the LTP is by invitation only, at the sole and absolute discretion of the Board.

Following determination that an Eligible Participant may participate in the Plan, the Board may at any time and from time to time make an Invitation to the Eligible Participant to receive Options and/or Performance Rights.

Subject to the Board determining otherwise prior to an invitation, each vested Option and each vested Performance Right entitles the Participant holding the Option or the Performance Right to subscribe for, or to be transferred, one Plan Share: in the case of an Option, on payment of the Exercise Price, if any.

Currently, Company B have granted performance rights and time-based rights (Rights) to eligible Participants. No dividends are paid on the Rights and the Rights do not entitle their holder to attend or to vote at company meetings.

The number of Awards and the vesting conditions for Awards issued under the LTP are determined prior to an Invitation being made and any performance hurdles and/or vesting conditions attached to the Awards are specified in the Invitation.

Awards under the LTP will only vest and be exercisable if the applicable performance hurdles and/or vesting conditions have been satisfied or are deemed to have been satisfied under the LTP rules.

Vesting of the time-based Rights are subject to continuing employment only, with no other performance conditions.

No amount is payable on the vesting of the Rights and a vested Performance Right will be automatically exercised within the period specified by the Board in the Invitation. Each exercised Award is an entitlement to one Share.

In the case of an Option, following the issuing of a Vesting Notification to the Participant, the vested Option is exercisable by the Participant within the Exercise Period specified by the Board in the Invitation, subject to the Participant delivering a signed Notice of Exercise.

The Company B Employee Share Plan

Company B established the ESP which operates under the Company B Employee Share Plan Rules.

Participation in the ESP is only available to employees who are not eligible to receive Awards under the LTP.

The ESP offered the Company Group Share Gift Plan (Gift Plan) and the Company Group Share Match Plan (Matching Share Plan).

Gift Plan

Under the Gift Plan, Participants may receive Shares for nil consideration up to a nominal amount (Gift Offer).

The participation and receipt of Gift Shares were automatic unless the employee formally elected to opt-out.

The Gift Offer was made to all full-time and part-time employees of Company B and its subsidiaries.

Participants will be subject to tax on the market value of the Gift Shares at the time of grant because the shares are awarded to them at no cost and have no conditions or restrictions attached to them.

Matching Share Plan

All full time and part time employees except employees who participate in the LTP are eligible to participate in Share Match Plan.

The securities that are acquired under Share Match Plan are fully-paid ordinary shares in Company B.

Participants who purchase Shares from their after-tax pay (Acquired Shares), up to a nominal amount, under the Share Match Plan receive Shares from Company B equal to the number of shares acquired and retained under the scheme (Matching Shares), subject to continuing employment for the specified period, that is, Company B will match the number of acquired shares on a 1:1 basis.

Share Match Plan operates on the basis of rolling Plan Years during which Acquired Shares may be acquired. There is no guarantee of participation in future Plan Years as future offers are subject to the Company B Board's discretion.

To be eligible, Participants were required to purchase Shares for a minimum value of $X up to a maximum of $X and remain in continuing employment up to one year to receive Matching Shares from Company B.

Eligible Participants receive an invitation document which sets out the following:

•                    The maximum Contribution by the Participant per Plan Year

•                    The methodology for determining the Participant's number of Acquired Shares

•                    The conditions to be satisfied for Matching Shares and the ratio to Acquired Shares

•                    The closing time of the enrolment period

•                    How to enrol, and

•                    Any other terms and conditions.

At the time an Acquired Share is acquired on behalf of a Participant, the Participant will acquire a conditional right to one Matching Share.

At the end of the Holding Period, the conditional right will convert to a Matching Share subject to all of the following conditions being satisfied:

•                    The Participant must hold the beneficial interest in the Acquired Shares for the duration of the Holding Period

•                    The Participant must not have applied to the Plan Administrator to have the Holding Lock removed before the end of the Holding Period

•                    Subject to exceptions, the Participant must remain an Eligible Participant for the duration of the Holding Period, and

•                    Any other conditions determined by the Company B Board from time to time.

Although the Acquired Shares are subject to a holding lock, a Participant can apply to have the holding lock removed and the shares transferred into their name. If a Participant does this, they will lose the entitlement to Matching Shares in respect of all Acquired Shares covered by the holding lock even if they continue to be held until the end of the Holding Period.

At the end of the Holding Period the lifting of the holding lock will be effected by the Plan Administrator.

Company B may elect to make a cash payment to a Participant instead of allocating Matching Shares. The payment must reflect the prevailing market value of Company B shares at the end of the Holding Period.

The Trust

With the establishment of the Plans and the increased number of senior executives and managers participating in the LTP, Company B determined that an employee share trust, the Company B Group Employee Share Trust would be advantageous in dealing with the increased complexity and administration associated with a larger employee shareholder population.

Company B's reasons for using the Company B Trust include:

•                    A company is unable to hold its own Shares. The Company B Trust is a vehicle which will enable Shares to be held for the purposes of the Plans and an independent Trustee acquiring shares in accordance with the Trust Deed allows Company B to meet its obligations under the Corporations Act regarding not dealing in its own shares, managing any insider trading issues involved in delivering own company shares and managing obligations in respect of Australian financial services and licensing

•                    From a commercial and governance perspective, the Company B Trust provides Company B with an arm's length vehicle for acquiring or holding Shares and flexibility relating to capital management to satisfy its obligations under the Plans through the new issue of Shares or, alternatively acquiring on-market

•                    Contributing to the Company B Trust to acquire Shares before the Awards vest may enable Company B to hedge against potential increases in costs to satisfy the Awards, due to share price growth, as well as the potential for insufficient Shares being available on-market immediately prior to vesting

•                    The Company B Trust provides an efficient structure for giving effect to vesting conditions that may be attached to the Awards granted under the Plans. As the Trustee is the legal owner of the Shares, the Participants have no ability to deal in the Shares (until such time that the Shares are transferred to the Participants)

•                    When vesting conditions are not met and the Awards are forfeited, the Company B Trust enables Shares held for forfeited Awards to be 'recycled' to satisfy other grants of Awards, and

•                    The Company B Trust establishes independent records and accounts for Participants.

The Trust was settled by means of the Company B Trust Deed (Trust Deed) between Company B and the Trustee.

The Trust was established to facilitate the acquisition, holding, allocation and when required the transfer of Shares to Participants in accordance with the Plans.

The Trust is an independent legal entity and does not form part of any tax consolidated group with the Australian subsidiaries of Company B. Neither Company B nor any other entity in the Company B Group is a beneficiary of the Trust and nor will they have an interest in the Shares held by the Trustee.

Obligations of the Trustee

The Company B Trust's sole activities are set out in the Trust Deed:

The sole purpose of establishing and administering the Trust and Trustee holding the Trust Fund on the trusts of this document is to acquire Shares so that they can be provided to Participants who are Beneficiaries as nominated by Company and to carry out any other activities incidental to achieving that purpose while ensuring that, notwithstanding anything else in this document, the Trust is administered so as to comply with the Sole Activities Test.

Allocation of Shares

Under the terms of the Trust Deed, Company B or any member within the Company B Group may instruct the Trustee to subscribe for, purchase or accept Shares specified in the request or directions.

The Trustee will, in accordance with the instructions received and pursuant to the Trust Deed acquire, deliver and allocate Shares to Participants, provided that the Trustee receives sufficient funds from the instructing member of the Company B Group to comply with the request or direction. A direction will only be effective if the Trustee has been provided with sufficient funds to meet any payment required for the subscription or purchase of Shares.

Whether the Trustee subscribes for or acquires on-market Shares is determined by the Board. A share buying program was approved by the Board.

Shares will not be allocated to Participants by the Trustee and no interest in the Shares will arise to a Participant, until the vesting conditions are satisfied and the ESS interests have vested.

In addition to acquiring, holding and allocating Shares the Trustee will undertake the following merely incidental activities associated with administering the Plans (including but not limited to):

•                    enter into and execute contracts

•                    open and operate bank and other accounts

•                    take advice from advisors

•                    receive dividends and other distributions on unallocated Shares

•                    compliance activities such as bookkeeping, preparation of financial, tax and regulatory statements, and other record-keeping and administrative actions necessary to operate the Company B Trust

•                    deduct or withhold any withholding taxes including by way of sale on account of an employee tax liability in respect of Shares, income tax on ESS interests where the Participant has not provided for his or her tax file number, and

•                    wind up the trust and distribute any remaining assets to Company B's employee Participants or to an employee share trust maintained for the benefit of Company B employees or to a charity if otherwise unappropriated.

Irretrievable cash contributions to the Trust

All funds received by the Trustee from Company B in the form of irretrievable cash contributions will constitute accretions to the corpus of the Company B Trust. The funds will not be returned or repayable to Company B but can be used by the Trustee to purchase Shares in the Company and subscribe for Shares in the Company.

The Shares will be delivered in accordance with the terms of the relevant Plans and the Trust Deed.

For Shares which have been allocated to certain Participants, the Trustee will hold these Shares on trust and the Participants will be absolutely entitled to these Shares. As soon as reasonably practicable (or, at a later time as the Participants may require), the Trustee will transfer the allocated Shares to the Participants, or as they direct.

Any unallocated Shares are held in a pool by the Trustee. These Shares are not allocated to any particular Participant, but rather held for the future delivery as directed by the Company.

Reasons for decision

Legislative references in this Ruling are to provisions of the ITAA 1936, or to provisions of the ITAA 1997, unless otherwise indicated.

Questions 1 and 2 - application of the single entity rule in section 701-1

The consolidation provisions of the ITAA 1997 allow certain groups of entities to be treated as a single entity for income tax purposes. Under the single entity rule (SER) in section 701-1 the subsidiary members of an income tax consolidated group are taken to be parts of the head company. As a consequence, the subsidiary members cease to be recognised as separate entities during the period that they are members of the income tax consolidated group, with the head company of the group being the only entity recognised for income tax purposes.

The meaning and application of the SER is explained in Taxation Ruling TR 2004/11 Income tax: consolidation: the meaning and application of the single entity rule in Part 3-90 of the Income Tax Assessment Act 1997. As a consequence of the SER, the actions and transactions of the subsidiary members of the Company A TCG are treated, for income tax purposes, as having been undertaken by Company A, as the head company of the TCG.

Questions 3 to 5

The SER in section 701-1 has no application to the Fringe Benefits Tax Assessment Act 1986. The Commissioner has therefore provided a ruling to Company A and to Company C (the latter is the only employing entity within the tax consolidated group).

Question 1

Summary

Company A will be entitled to deduct an amount under section 8-1 for the amount recharged and invoiced by Company B in respect of Company C's share of the irretrievable cash contributions made by Company B to Trustee of the Company B Trust to fund the subscription for, or acquisition on-market of, Company B's shares (Shares) to satisfy awards issued to the eligible employees of Company C, pursuant to the Plans.

Detailed reasoning

Subsection 8-1(1) allows you to deduct from your assessable income any loss or outgoing to the extent that it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income. However, pursuant to subsection 8-1(2), you cannot deduct a loss or outgoing to the extent that it is a loss or outgoing of capital, or of a capital nature.

The Company A Group is in the business of producing, marketing and selling products in Australia, which produce assessable income and it operates an ESS as part of its remuneration strategy.

Under its Plans, Company B grants Rights to employees (Participants) and makes irretrievable cash contributions to the Trust, in accordance with the Plans and the Trust Deed. The Trustee uses the Trust to acquire Shares (either on-market or by subscription), for allocation to Participants.

Company B recharges and invoices Company C, as the employing entity for the Company A TCG.

Incurred in carrying on a business

Company B or a subsidiary of the Group must provide the Trustee with all the funds required to enable the Trustee to subscribe for, or acquire, Shares (clauses 2 and 3 of the Trust Deed).

The contributions made by Company B are irretrievable and non-refundable, in accordance with the Trust Deed.

Company B has granted Rights to Shares under the Plans and will continue to do so as part of its remuneration and rewards program. The costs incurred by Company B for the acquisition of shares to satisfy Rights arise as part of these remuneration arrangements, and contributions to the EST (then recharged and invoiced to Company C, as the employing entity for the Company A TCG) are part of an on-going series of payments which are in the nature of employee remuneration.

Not capital or of a capital nature

The costs will be an outgoing incurred for periodic funding of an ESS for employees of Company C and thereby the Company A Group. Costs incurred will be in relation to more than one grant of Rights, and Company B will continue satisfying outstanding Rights using shares acquired by the EST. This indicates that the irretrievable cash contributions to the EST are ongoing in nature and are part of the broader remuneration expenditure of Company A on behalf of the TCG.

While the irretrievable cash contributions may secure an enduring or lasting benefit for the employer that is independent of the year-to-year benefits that the employer derives from a loyal and contented workforce, that enduring benefit is considered to be comparatively small.

As the amount recharged and invoiced by Company B in respect of Company C's share of the irretrievable cash contributions to the Trustee are business outgoings and are not of a capital nature, paragraph 8-1(2)(a) is not satisfied.

Accordingly, Company A will be entitled to deduct an amount under section 8-1 for amount recharged and invoiced by Company B in respect of Company C's share of the irretrievable cash contributions made by Company B to Trustee to fund the subscription for, or acquisition on-market of Shares to satisfy Awards issued to the eligible employees of Company C, pursuant to the Plans.

Timing of the deduction

Section 83A-210 applies to determine the timing of the deduction, but only in respect of the contribution provided to a trust to purchase shares in excess of the number required in a year of income, under an employee share scheme. Further information is available in ATO Interpretative Decision ATO ID 2010/103 Income Tax- Employee share scheme: timing of deduction for money provided to the trustee of an employee share trust.

Indeterminate rights under the Plans

A right to a Matching Share provided under the Plan is an indeterminate right because that right entitles the employee to acquire either a Matching Share or cash, to be determined at a future time at the discretion of the employer. Although the indeterminate right is not an ESS interest within the meaning of subsection 83A-10(1) at the time it is granted, where it is ultimately satisfied with shares instead of cash (or when the number of shares the employee is entitled to receive is determined), the indeterminate right will, pursuant to section 83A-340, be treated as if it had always been an ESS interest.

Section 83A-210 applies equally to contributions made in respect of ESS interests and indeterminate rights. Therefore, an irretrievable cash contribution in respect of an indeterminate right is taken to have been paid at the acquisition time of the ESS interest. Once an indeterminate right becomes an ESS interest, deductible contributions made in respect of those rights can be claimed in the income year when the ESS interest is deemed to have been acquired under section 83A-340 (this will be the year in which the indeterminate right was granted to the employee). Once this has been established, such contributions can be matched to ESS interests issued to the employee and where necessary the relevant earlier income year assessments can be amended to allow the deduction (Item 28 of subsection 170(10AA)).

It is important to note that an indeterminate right which is satisfied by the provision of cash never becomes an ESS interest and the contribution to the Trust in respect of the provision of that right is permanently deferred. However, where that ESS interest is subsequently issued to another participating employee, this employee becomes the "ultimate beneficiary" and the deduction is available in the income year that this participating employee acquired this ESS interest.

Question 2

Summary

The Commissioner will not make a determination that Part IVA applies to deny, in part or full, any deduction claimed by Company A for the amount recharged and invoiced by Company B in respect of Company C's share of the irretrievable cash contributions made to the Trustee to fund the subscription for, or acquisition on-market of, Company B shares for Company C's eligible employees, pursuant to the Plans.

Detailed reasoning

Part IVA is a general anti-avoidance provision which gives the Commissioner the power to cancel a 'tax benefit' that has been obtained, or would, but for section 177F, by a taxpayer in connection with a scheme to which Part IVA applies.

The Commissioner generally accepts that a general deduction may be available where an employer provides money or other property to an EST where the conditions of Division 83A are met.

In this case, the scheme does not contain the elements of artificiality or unnecessary complexity and the commercial drivers sufficiently explain the entry into the use of the Trust arrangement.

Therefore, having regard to the eight factors set out in paragraph 177D(2), the Commissioner has concluded that the scheme is not being entered into or carried out for the dominant purpose of enabling Company A to obtain a tax benefit.

Question 3

Summary

The amount recharged and invoiced by Company B in respect of Company C's share of the irretrievable cash contributions made by Company B to the Trustee to fund the subscription for, or acquisition on market of, Shares in respect of employees of Company C will not constitute a 'fringe benefit' within the meaning of subsection 136(1) of the FBTAA.

Detailed reasoning

An employer's liability to fringe benefits tax (FBT) arises under section 66 of the FBTAA, which provides that tax is imposed in respect of the fringe benefits taxable amount of an employer for the relevant year of tax.

One benefit excluded from being a 'fringe benefit', pursuant to paragraph (ha) of subsection 136(1) of the FBTAA, is a benefit constituted by the acquisition of money or property by an employee share trust within the meaning of the ITAA 1997.

In examining whether the requirements of subsection 130-85(4) are met, it is the activities of the trustee in relation to a particular trust that is relevant. To qualify as an EST, a trustee's activities must be limited to those described in paragraphs 130-85(4)(a), (b) and (c).

Paragraphs 130-85(4)(a) and (b) are satisfied because:

•                    the Trust acquires shares in a company, namely Company B, and

•                    the Trust ensures that ESS interests as defined in subsection 83A-10(1) are provided under an ESS (as defined in subsection 83A-10(2)) by allocating those shares to the employees in accordance with the Trust and the Plans.

Paragraph 130-85(4)(c) provides that a trustee can engage in activities that are merely incidental to those described in paragraphs 130-85(4)(a) and (b). The phrase 'merely incidental' takes its ordinary meaning, with further guidance drawn from the context and purpose of the legislation in which it appears. 'Merely incidental' is not defined in the legislation and has not been judicially considered in the context of subsection 130-85(4). The Macquarie Dictionary defines 'merely' to mean 'only as specified, and nothing more'. 'Incidental' is defined as 'happening or likely to happen in fortuitous or subordinate conjunction with something else'.

The Commissioner's views on the types of activities that are merely incidental and not merely incidental are set out in Taxation Determination TD 2019/13: Income tax: what is an 'employee share trust'?

Activities that result in employees being provided with additional benefits (such as the provision of financial assistance, including a loan to acquire the shares) are not considered to be merely incidental.

In the present case, 'the sole purpose of establishing and administering the Trust' according to the Trust Deed is to undertake activities that align with the definition of an employee share trust under section 130-85(4), including paragraph 130-85(4)(c), as the other activities undertaken by the Trustee are merely incidental to managing the Plans.

Therefore, the amount recharged and invoiced by Company B in respect of Company C's share of the irretrievable cash contribution made by Company B to the Trustee to fund the subscription for, or acquisition on-market of Company B's shares in respect of employees of Company C will not be a fringe benefit within the meaning of subsection 136(1) of the FBTAA.

Question 4

Summary

The provision of Awards under the Plans will not constitute a fringe benefit within the meaning of subsection 136(1) of the FBTAA.

Detailed reasoning

As stated above in response to Question 3, an employer's liability to FBT arises under section 66 of the FBTAA, which provides that tax is imposed in respect of the fringe benefits taxable amount of an employer for the relevant year of tax.

In general terms, a 'fringe benefit' is defined in subsection 136(1) of the FBTAA as being a benefit provided to an employee or an associate of an employee 'in respect of' the employment of the employee. However, certain benefits are excluded from being a 'fringe benefit' by virtue of paragraphs (f) to (s) of the 'fringe benefit' definition.

In particular, paragraph (h) of subsection 136(1) of the FBTAA excludes the following from being a 'fringe benefit':

(h) a benefit constituted by the acquisition of an ESS interest under an employee share scheme (within the meaning of the Income Tax Assessment Act 1997) to which Subdivision 83A-B or 83A-C of that Act applies;

The Commissioner accepts that the Plans comprise an ESS, the Awards provided under the Plans are ESS interests, and that Subdivision 83A-B or 83A-C applies to those ESS interests.

Accordingly, the provision of Awards under the Plans will not be subject to FBT on the basis that they are acquired by Participants under an ESS (to which Subdivision 83A-B or 83A-C will apply) and are thereby excluded from being a fringe benefit by virtue of paragraph (h) of the definition of 'fringe benefit' in subsection 136(1) of the FBTAA.

In addition, when a Right is later exercised, it will not give rise to a fringe benefit as any benefit received would be in respect of the exercise of the Right and not in respect of employment (refer ATO Interpretative Decision ATO ID 2010/219 Fringe Benefits Tax Fringe benefit: shares provided to employees upon exercise of rights granted under an employee share scheme).

Question 5

Summary

The Commissioner will not make a determination that section 67 of the FBTAA applies to increase the aggregate fringe benefits amount of Company C.

Detailed reasoning

Section 67 of the FBTAA is a general anti-avoidance provision in the FBTAA. Subsection 67(1) of the FBTAA is satisfied where a person, or one of the persons who entered into or carried out an arrangement or part of an arrangement under which a benefit is or was provided to a person, did so for the sole or dominant purpose of enabling an eligible employer, or the eligible employer and another employer, to obtain a tax benefit.

The Commissioner will only make a determination under section 67 of the FBTAA if the arrangement resulted in the payment of less FBT than would be payable but for entering into the arrangement.

As stated above in the answer to Question 4, without the provision of a 'fringe benefit', no amount will be subject to FBT. The benefits provided to the Trustee by way of irretrievable cash contributions to the Trust and to Participants by way of the provision of Rights under the Plans are excluded from the definition of a fringe benefit for the reasons provided in the answer to Question 4, above. As these benefits have been excluded from the definition of a fringe benefit, the FBT liability is not any less than it would have been but for the arrangement.

Accordingly, the Commissioner will not seek to make a determination under section 67 of the FBTAA.