Edited version of private advice

Authorisation Number: 1052108216491

Date of advice: 26 September 2023

Ruling

Subject: Employee share trust

Issue 1: Income Tax

Question

Will the irretrievable cash contributions by Company to the to fund the acquisition of, or subscription for, Company shares (Shares) by the Trust be assessable income of the Trust under section 6-5 or 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No

Issue 2: Capital Gains Tax

Question

Will a capital gain or capital loss that arises for the Trustee at the time when CGT event E5 happens in relation to Shares held by the Trustee be disregarded under section 130-90 of the ITAA 1997, if the employees acquire the Shares for the same or less than the cost base of the Shares in the hands of the Trustee?

Answer

Yes

This ruling applies for the following periods:

Income year ended 30 June 2022

Income year ended 30 June 2023

Income year ended 30 June 2024

Income year ended 30 June 2025

Income year ended 30 June 2026

Relevant facts and circumstances

Company is an Australian public company and is the head company of the Company tax consolidated group (TCG).

Plan A

The Plan A was approved by the Company board on DD MM YYYY.

The board will determine the procedure for granting options to participants, including the form and content of any invitation, offer or acceptance procedure, the issue price (if any), performance conditions (if any), exercise price (if any), exercise date, the expiry date of the options (if any) and any other terms or conditions the Board considers appropriate and which are not inconsistent with the Plan A Rules.

Subject to the Plan A Rules, each option entitles the holder to subscribe for and be allotted, credited as fully paid, one share at the exercise price (if any).

At the time an option is granted, the board may impose such performance conditions (if any) as it considers appropriate.

Subject to the Plan A Rules, an option may be exercised only if the performance conditions (if any) relating to it have been satisfied or waived by the board.

Unless the board otherwise determines and subject to the Plan A Rules, a participant may not exercise an option before the exercise date for the option.

Where a participant has ceased to be employed by the Company or a subsidiary by reason of total and permanent disability or death, or such other circumstances as determined by the board, then subject to the Plan A Rules, the participant may exercise the option within 90 days after cessation of the participant's employment.

An option is exercisable by the participant by providing to the Company, secretary of the Company or such other person as the board delegates, the following:

•                     a completed notice (in the form required by the Company) of exercise of options and application for shares

•                     the relevant option certificate, and

•                     payment of the exercise price (if any).

Upon the exercising of options by a participant, the board may, in its discretion, determine not to issue to a participant all or some of the shares and may instead make a cash payment to the participant equivalent to the fair market value of the shares (or any part thereof as determined by the board) as at the date of exercise of the option (less any unpaid exercise price per share applicable to the exercise of the options). Where options are settled in cash, this will be done outside of the Trust directly by the Company.

Subject to the Plan A Rules, options are not transferable and a participant must not encumber or otherwise deal with the options.

Expiry of options

An option not exercised will expire on the first to occur of the following:

•                     the 15th anniversary of the date of grant of the option unless the board in its discretion has determined at the time of any invitation or offer of options in accordance with the Plan A Rules that another expiry date is to apply to an option

•                     the expiration of the time within which the option must be exercised under the Plan A Rules, no later than the date which is 15 years from the date of grant for the option

•                     subject to the Plan A Rules, when before the exercise date the participant has ceased to be employed by the Company or a subsidiary, and

•                     such date as specified by the board if it determines that the participant has committed any act of fraud, defalcation, or gross misconduct, or otherwise in accordance with the Plan A Rules.

Where a participant enters, or is purported to enter, into any scheme, arrangement or agreement which has the effect of altering or limiting the economic risk or benefit to be derived from the options, all options will immediately lapse.

Forfeiture of options

Prior to the exercise date, if the board in its reasonable opinion determines that a participant is engaging in, or has engaged, in any of the following conduct, the board may declare that all, or some, of the participant's options are forfeited:

•                     cessation of employment, other than for special circumstances, redundancy or by mutual agreement between the board and the participant

•                     fraud, dishonesty, gross misconduct or criminal behaviour

•                     behaviour that may impact on the Company or a subsidiary's reputation or financial soundness

•                     misstatement of financial results or achievement of performance conditions

•                     material breach of the participant's obligations to the Company or a subsidiary

•                     behaviour that brings the Company, subsidiary, or any member of the Company or a subsidiary into disrepute.

The board will provide the participant with written notice of forfeiture of the options and the date on which the options will lapse.

Following the exercise date, if the board in its reasonable opinion determines that a participant is engaging in or has engaged in any conduct set out in the Plan A Rules, the board may declare that the participant shall forfeit any right or interest in the shares or other entitlements of the participants under Plan A.

Subject to the Trust, the board in its absolute discretion may determine that forfeited shares are to be sold, transferred or otherwise disposed of and how any proceeds therefrom are to be applied.

Plan B

Plan B was approved by the board on DD MM YYYY.

Plan B allows the Company to grant shares to participants.

The board may, in its absolute discretion, but in accordance with the terms of Plan B and on such additional terms and conditions as the board determines, operate Plan B and:

•                     invite an employee to contribute an agreed amount or percentage of the participant's pre-tax remuneration and apply for a grant of shares, or

•                     grant employee shares.

At the time of the invitation or grant, the board will provide each employee with an invitation letter which contains the following information:

•                     the type of shares being granted

•                     the number or value of shares being granted or the method for determining the number or value of shares

•                     the sacrifice amount (if any) that may be contributed and the period specified over which the participant agrees to make the sacrifice amount contributions

•                     the grant date

•                     details of any shares to be allocated to a participant free of charge

•                     details of any applicable conditions, including performance or service conditions

•                     details of any trading restrictions on shares, including the relevant restriction period

•                     treatment of shares in the event that a participant ceases to be an employee, and

•                     any other relevant terms and conditions to be attached to the shares allocated under the Plan B.

A grant of shares is personal to the participant and cannot be transferred to other persons or entities subject to the Plan B Rules.

Where an application to participate in the Plan B has been accepted by the board:

•                     each participant will be advised of the number of shares that have been allocated to them, as soon as reasonably practicable, and

•                     where relevant, each participant authorises the group (or any group company) to withhold the sacrifice amount over the participation period.

Unless otherwise stated in the invitation letter, shares allocated under the Plan B cannot be forfeited by a participant for any reason.

The Company is authorised, but not required, to bear all brokerage, commission, stamp duty and other transaction costs payable in relation to the acquisition of shares by a participant under the Plan B.

Unless the board determines otherwise, a participant shall be entitled to vote, receive distributions (such as dividends) and, subject to applicable trading restrictions, have all rights of a shareholder in respect of shares allocated to the participant under the Plan B Rules. Whilst shares are subject to trading restrictions, the rights and entitlements attaching to them must be exercised in accordance with the Plan B Rules.

Unless otherwise determined by the board, trading restrictions may be lifted on the earlier of the following:

•                     the date specified in the terms of the invitation letter, or

•                     the time when the participant ceases to be an employee (in accordance with the Plan B Rules).

A share subject to trading restrictions under Plan B is only transferable:

•                     with the consent of the board, which will only be provided in exceptional circumstances, and

•                     by force of law upon the death of the participant to the participant's legal personal representative or upon bankruptcy of the participant to the participant's trustee in bankruptcy.

The group may implement any procedure it considers appropriate to restrict a participant from dealing in shares that are subject to trading restrictions, including but not limited to imposing a holding lock on any shares subject to trading restrictions under Plan B, or requiring the applicable shares to be held by a Trustee on behalf of a participant for such time as the shares are subject to trading restrictions under the Plan B.

Ceasing employment

Subject to the terms of the invitation letter and unless the board determines otherwise, where a participant ceases to be an employee of the group, participation in Plan B ceases.

If a participant ceases to be an employee during the participation period but before the shares are allocated, the sacrifice amount will be reimbursed to the participant and subject to applicable taxes.

Unless otherwise set out in the terms of the invitation letter, if a participant ceases to be an employee while trading restrictions apply in respect of their shares under the plan, the trading restrictions will cease to apply immediately on cessation of employment.

Upon cessation of employment, a participant will be required to sell or have the shares transferred to a personal account within 60 days of ceasing employment.

If a participant remains an employee but is transferred to work in another country, or changes tax residence status, and as a result would:

•                     become subject to restrictions on his or her ability to hold or deal in shares or receive any proceeds of sale from the sale of shares due to the securities laws or exchange control laws of the country to which they are transferred, or

•                     suffer a tax disadvantage (or cause a member of the group to suffer a tax disadvantage),

the board, in its discretion and having regard to the requirements of the ITAA 1997, may determine any treatment in respect of shares and any trading restrictions or both, applicable to shares allocated under Plan B, before or after the employee's transfer takes effect.

Trust

On DD MM YYYY, Company established the Trust under a deed entered into between Company and the Trustee as amended on DD MM YYYY and on DD MM YYYY (Trust Deed).

The Trustee is an independent third party.

The recitals to Trust Deed states that Company wished to establish the Trust for the sole purpose of subscribing for, acquiring, holding and transferring shares in connection with equity incentive plans for the benefit of participants in those plans. Trust assets means the property, rights and income of the Trust and includes any ESS Interests, accretions, unallocated trust shares and cash.

The Trustee has the powers to:

•                     enter into and execute all contracts, deeds and other documents

•                     subscribe for, purchase or otherwise acquire trust assets or rights which the Trustee is authorised by the Trust Deed to acquire on such terms and conditions as it thinks fit, and do all things incidental to this activity

•                     sell or otherwise dispose of trust assets or rights which the Trustee is authorised by the Trust Deed to dispose of on such terms and conditions as directed by the relevant participant, and do all things incidental to this activity

•                     receive dividends or distributions on the trust shares and to apply those amounts in accordance with the Trust Deed

•                     sell or transfer the trust shares to the participants or their nominees and apply the proceeds of the sale in accordance with the Deed and Plan Rules and relevant terms of participation

•                     sell any rights relating to the trust shares and apply the proceeds of sale in accordance with the Trust Deed

•                     take and act upon the advice or any opinion of any legal practitioner or other professional adviser

•                     open and operate any bank account, retain on current or deposit account at any bank any money which it considers proper

•                     borrow money for the purpose of acquiring shares or rights in the Company, where no security is provided over the assets of the Trust and the interest payable on such a loan is not more than arm's length commercial rates

•                     receive dividends in respect of unallocated trust shares and any interest from bank accounts and using those funds to:

­        acquire additional shares for the purpose of a plan

­        subject to the Trust Deed, pay necessary and incidental costs of administered the Trust and undertaking the activities described in paragraphs 130-85(4)(a), (b) and (c) of the ITAA 1997, including without limitation paying costs relating to the audit of the Trust and fees for professional services provided to the Trustee in relation to the Trust, or

­        pay interest on loans provided for the acquisition of shares or rights in the Company, where the interest payable does not exceed arm's length commercial rates

•                     to do all acts, matters or things which the Trustee in its discretion considers necessary or expedient to administer and maintain the Trust and the trust assets or for the purpose of giving effect to, and carrying out, the trusts, powers and discretions conferred on the Trustee by the Trust Deed or the law.

From 1 July 2021 to 6 February 2023:

•                     the Trustee did not borrow money for any purpose other than to acquire shares in Company under the Plans. No security was provided over the assets of the Trust in respect of the borrowing and interest was payable by the Trustee at arms-length commercial rates, and

•                     the Trustee's activities in its capacity as Trustee of the Trust, were limited to managing the Plans.

The Company and the Trustee agree that the Trust will be managed and administered so that it satisfies the definition of "employee share trust" for the purposes of subsection 130-85(4) of the ITAA 1997.

The Trustee's activities in its capacity as trustee will be limited to the relevant Plan Rules and relevant terms of participation.

Acquisition of trust shares

The Trustee will, in accordance with instructions received from the Company under the Plan Rules and as soon as reasonably practicable, acquire, allocate and deliver shares for the benefit of a participant provided that the Trustee:

•                     receives sufficient payment to subscribe for or purchase shares, or

•                     has sufficient unallocated trust shares available.

The trust assets, other than those referred to in clauses of the Trust Deed, and including unallocated trust shares, are to be held by the Trustee on trust for the participants to be nominated by the Company from time to time in accordance with the terms of the Trust Deed, the relevant Plan Rules, and the relevant terms of participation until the termination of the Trust under the Trust Deed or by operation of law. Nothing in the Trust Deed confers or is intended to confer on the Company any charge, lien or any other proprietary right or proprietary interest in the shares acquired by the Trustee.

If the Trustee has received a notice under the clauses of the Trust Deed, subject to the Trustee receiving sufficient payment or having sufficient capital as required by the notice, the Trustee must in accordance with the terms of that notice from the board:

•                     purchase the requisite number of (or proportion of that number determined by the board) shares on market or off market on behalf of the relevant participants or participants generally

•                     subscribe for, and the Company must issue to the Trustee, the requisite number (or proportion of that number determined by the board) of shares on behalf of the relevant participants or participants generally

•                     allocate shares that are trust assets (not being trust shares held on behalf of any other particular participant) to be held on behalf of the relevant participants or participants generally, or

•                     effect a combination of the acts above.

Funding

The Company must provide the Trustee, or cause its related body corporate to provide to the Trustee, any funds required by the Trustee in order to comply with is obligations under the clauses of the Trust Deed.

Subject to the clauses of the Trust Deed, all funds received by the Trustee from the Company or its related body corporate will constitute accretions to the corpus of the Trust and will not be repaid to the Company and no participant shall be entitled to receive such funds.

Funds received by the Trustee from the Company and its related body corporate may be paid to the Company where the Trustee subscribes for shares in accordance with the Trust Deed, the relevant Plan Rules or relevant terms of participation.

Where an amount paid by the Company or its related body corporate to the Trustee in respect of the acquisition of shares for the benefit of a participant is in excess of the amount required by the Trustee to subscribe for, acquire, allocate or deliver those shares, the board may require the Trustee to:

•                     apply such amounts to subscribe for, acquire or allocate and deliver shares in accordance with the Trust Deed, the relevant Plan Rules or the relevant terms of participation, or

•                     deposit the funds into any account opened and operated by the Trustee in accordance with the clauses of the Trust Deed to be used for the purposes set out in the clauses of the Trust Deed.

Subject to the clauses of the Trust Deed, the Company must pay all trust expenses. The Trustee may pay trust expenses from cash dividends received in relation to unallocated shares and interest earned on funds held in the Trust.

Trust expenses means all reasonable disbursements charged to the Trust, including expenses, outgoings, costs and charges incurred in establishing and operating a Company plan and includes any amount of income or other tax payable by the Trustee in relation to a Company plan and the costs of the audit of the Trust but excludes any costs directly related to selling and transferring trust shares or exercising rights (if any).

The Trustee is prevented from charging to, and is not entitled to seek or receive from, the Trust or any participant any fees, commission or remuneration in respect of its office. Reimbursement of the Trustee from the Trust for third party costs and expenses it has incurred in the execution or purported execution of the Trust or any of the powers, authorities or discretions vested in the Trustee will not constitute fees, commission or other remuneration of the Trustee.

The Company must pay to the Trustee from the Company's own resources any fees, commission or remuneration and reimburse any expenses incurred by the Trustee as the Company and the Trustee agree from time to time. The Trustee is entitled to retain for its own benefit any such fees, commissions or remuneration or reimbursement.

The Company incurs costs in relation to the on-going administration of the Trust including:

•                     employee plan recording keeping

•                     production and dispatch of holding statement to employees

•                     costs incurred in the acquisition of shares on market, such as brokerage costs and the allocations of such shares to participants

•                     other trustee expenses such as the annual audit of the financial statements and the annual income tax return of the Trust, and

The Company also incurs various establishment and implementation costs including initial costs to establish the Trust, and services provided by the Company's accounting, tax and legal advisors.

Allocation of trust shares

The Company may direct the Trustee to allocate unallocated trust shares to a participant from time to time. Following the allocation to a participant of Trust shares held by the Trustee in accordance with the Trust Deed, the Company may direct the Trustee to continue to hold those Trust shares on behalf of the participant and on the terms of the Trust Deed.

Subject to clauses in the Trust Deed, at any time after a restrictive period (if any) and subject to any administrative guidelines established by the board, a participant may give to the Trustee, or be deemed by the relevant Plan Rules or relevant terms of participation to give the Trustee, a withdrawal notice, and following any required approval by the board of the withdrawal notice, the Trustee must transfer legal title in those trust shares or sell those trust shares in accordance with the terms of the approved withdrawal notice and clauses of the Trust Deed.

Subject to clauses in the Trust Deed, if the relevant Plan Rules or relevant terms of participation permit, the Trustee may at the direction of the participant, sell any of the trust shares to which the participant is entitled. On sale of any such trust shares, subject to any Plan Rules or relevant terms of participation, the Trustee will apply the proceeds of sale (and pay to the participant any other monies held on the account for the participant):

•                     first, in payment of any brokerage and other costs and expenses of the sale incurred by the Trustee (including an amount sufficient to meet the tax liability (if any) incurred by the Trustee resulting from that sale), and

•                     second, the balance (if any) in payment to the relevant participant.

Subject to clauses of the Trust Deed, the Trustee must do all things required by it to transfer legal title in Trust shares to a participant on whose behalf the trust shares are held or to any third party as directed by the relevant participant (and pay to the participant any other monies held on the account for the participant):

•                     where required to do so, or permitted, by the relevant Plan Rules or relevant terms of participation as soon as reasonably practicable,

•                     if the Trust is terminated under clauses of the Trust Deed, or

•                     otherwise, where the board in its discretion determines.

Unallocated trust shares

Before the allocation to a participant of an unallocated trust share held by the Trustee in accordance with the Trust Deed, the Trustee:

•                     subject to the Trust Deed, must not, at its own discretion, exercise any voting rights in relation to the unallocated share, except to the extent consistent with the Trustee's fiduciary duties

•                     subject to the Trust Deed, may exercise at its own discretion any voting rights in relation to the unallocated share, but only where the Trustee determines that voting in those circumstances is 'merely incidental' to obtaining, holding and providing shares in the Company to participants

•                     may apply any capital receipts, dividends or other distributions received in respect of the unallocated Trust share to purchase further shares to be held on trust for the purposes of this Trust

•                     must not participate in any rights issues in respect of the unallocated trust share

•                     must hold any bonus shares issued in respect of the unallocated trust shares on trust for the purpose of the Trust Deed, and

•                     must keep an account of all unallocated trust shares acquired by the Trustee that are held as trust assets.

The board may from time to time specify that certain unallocated trust shares are to be held by the Trustee for a particular plan in which case:

•                     the board must identify the unallocated trust shares which are to be held for a particular plan and must direct the Trustee in writing to hold those unallocated trust shares for that particular plan

•                     the Trustee must, when directed to allocate shares to a participant in accordance with the Trust Deed, only use the unallocated trust shares if the participant is to be allocated shares as a participant under the relevant plan, and

•                     if the board wishes the Trustee to hold any of the unallocated trust shares for a different plan, or for those shares to be used to allocate shares to a participant under a different plan, it must notify the Trustee in writing.

Forfeited shares

The board may from time to time by notice in writing direct the Trustee to hold or reallocate any forfeited shares (or the proceeds of sale of such forfeited shares):

•                     for the benefit of one or more participants, or

•                     for the benefit of any of the plans.

Income and capital distribution

A participant is presently entitled to so much of the net income of the Trust for a year of income which is attributable to:

•                     the trust shares held by the Trustee on behalf of the participants

•                     the proceeds of sales arising from the sale by the Trustee of rights under a rights issue on behalf of a participant, and

•                     transactions or events related to trust shares or property related to or arising from trust shares held by the Trustee on behalf of the participant.

Other matters

From 1 July 2021 to 6 February 2023, all participants to Plan A and Plan B were employees of employing companies of the TCG or otherwise had a relationship with those companies which are similar to employment for the purpose of section 83A-325 of the ITAA 1997.

Reasons for decision

All legislative reference are to provision of the ITAA 1936 or to provisions of the ITAA 1997, unless otherwise of indicated.

Question 1

Detailed Reasoning

The total assessable income of a trust estate is calculated as if the trustee were a resident taxpayer in respect of that income (subsection 95(1) of the ITAA 1936). The assessable income of a taxpayer includes income under ordinary concepts (section 6-5) or statutory income (section 6-10).

Section 10-5 contains a summary list of the provisions for statutory income. None of the provisions listed in section 10-5 are relevant in the present circumstances. Therefore, the irretrievable cash contributions made by the Company to the Trustee will not be assessable income of the Trustee under section 6-10.

The cash contributions made by Company constitute accretions to the corpus of the Trust and are irretrievable and non-refundable in accordance with the Trust Deed (other than as consideration for shares under the terms of the Trust Deed).

Therefore, the contributions constitute capital receipts to the Trustee, and are not assessable under section 6-5 or 6-10 (ATO Interpretative Decision ATO ID 2002/965 Income Tax - Trustee not assessable on employer contributions made to it under the employer's employee share scheme).

Question 2

Detailed Reasoning

CGT event E5 happens if a beneficiary becomes absolutely entitled to a CGT asset of a trust as against a trustee (subsection 104-75(1)).

Subsection 130-85(2) treats a beneficiary as absolutely entitled to the relevant share from the time of acquisition of the ESS interest until they no longer have the ESS interest in the share. Subsection 130-85(2) only applies if the following requirements under subsection 130-85(1) are satisfied:

(a)          the beneficiary acquires an ESS interest under an employee share scheme

(b)          Subdivision 83A-B or 83A-C applies to the ESS interest, and

(c)           The ESS interest is, or arises because of, an interest the beneficiary holds in an employee share trust.

Participants acquire ESS interest under an employee share scheme

An 'employee share scheme' is defined in subsection 83A-10(2) as a scheme under which 'ESS interests' in a company are provided to employees of the company, or a subsidiary of the company, in relation to the employees' employment.

Subsection 83A-10(1) defines an 'ESS interest' in a company as a beneficial interest in either a share in the company or a right to acquire a beneficial interest in a share in the company.

As participants are granted shares or options under the Plans in relation to their employment, which provide them with shares or the right to acquire shares, they are taken to have acquired ESS interests under an employee share scheme and paragraph 130-85(1)(a) is satisfied.

Subdivision 83A-B or 83A-C applies to the shares or options

As participants acquire shares or options under the Plans at a discount or for nil consideration (i.e. at a discount), Subdivision 83A-B will apply to those shares or options (unless Subdivision 83A-C applies instead) and paragraph 130-85(1)(b) is satisfied.

The shares or options arose because of an interest the participant hold in an employee share trust

The shares or options granted to participants under the Plans provide participants with an interest in the hares held in the Trust.

Subsection 130-85(4) defines an 'employee share trust', for an employee share scheme, as a trust whose sole activities are:

(a)          obtaining shares or rights in a company

(b)          ensuring that ESS interests in the company that are beneficial interests in those shares or rights are provided under the employee share scheme to employees, or to associates of employees, of:

                             i.                the company, or

                            ii.                a subsidiary of the company, and

(c)           other activities that are merely incidental to the activities mentioned in paragraph (a) or (b).

Paragraphs 130-85(4)(a) and (b) of the definition of an employee share trust are satisfied because:

•                     the Trust acquires shares or rights to shares in the Company, and

•                     the Trust ensures that shares and options (which are ESS interests) are provided to participants under the employee share schemes by allocating them in accordance with the governing documents of the scheme.

Tax Determination TD 2019/13 Income tax: what is an 'employee share trust'? sets out the Commissioner's view on the type of activities that are and are not considered to be merely incidental for the purposes of paragraph 130-85(4)(c).

Whether the Trust is an employee share trust for the purposes of subsection 130-85(4) requires an analysis of what the Trustee actually does, not only the powers and duties that are prescribed in the Trust Deed.

The Commissioner considers the Trust to be an employee share trust based on the terms of the Trust Deed and paragraph 130-85(1)(c) is satisfied.

As all of the conditions in subsection 130-85(1) are satisfied, the participants are taken to be absolutely entitled to the shares held by the Trustee from the time they were granted the shares or options under the Plans pursuant to subsection 130-85(2), and CGT event E5 will happen at that time

Exemptions under section 130-90

Any capital gain or capital loss that the Trustee makes, if CGT event E5 happens, is disregarded if section 130-90(1) applies. The exemption in section 130-90(1) will apply because:

•                     the Trust is an employee share trust as defined in subsection 130-85(4) (subsection 130-90(1))

•                     at the time the participant becomes absolutely entitled to the shares as against the Trustee, CGT event E5 happens (paragraph 130-90(1)(a))

•                     CGT event E5 happens in relation to shares (paragraph 130-90(1)(b))

•                     the participant acquires the share by exercising an option granted under Plan A (paragraph 130-90(1)(c)), and

•                     the participant acquired the options under Plan A for nil considerations (i.e. at a discount) and therefore Subdivision 83A-B will apply to those options (unless Subdivision 83A-C applies instead) (paragraph 130-90(1)(d)).

Likewise, any capital gain or capital loss that the Trustee makes, if CGT event E5 happens, is disregarded if subsection 130-90(1A) applies. The exemptions in subsection 130-90(1A) will apply because:

•                     prior to CGT event E5 the shares held by the Trust are ESS interests (paragraph 130-90(1A)(a))

•                     CGT event E5 applies as the participants become absolutely entitled to the shares as against the Trustee (subparagraph 130-90(1A)(b)(i)), and

the participant acquired the shares under Plan B as they are acquired in return for a reduction in salary or wages (paragraph 130-90(1A)(c)).