Edited version of private advice

Authorisation Number: 1052324862417

Date of advice: 1 November 2024

Ruling

Subject: CGT - Employee share schemes

Question 1

Will the irretrievable cash contributions by Company X or any member of the Company X income tax consolidated group (Company X TCG), to the trustee of the Company X Trust (Trustee) to fund the acquisition of Company X shares by the Company X Employee Share Trust (Trust) for the purposes of the Plans be assessable income of the Trust under section 6-5 or 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer 1

No

Question 2a

Will a capital gain or loss that arises for the Trustee pursuant to the Original Trust Deed and Amended Trust Deed at the time when the employees become absolutely entitled to Company X Shares (capital gains tax (CGT) event E5) 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 2a

Yes

Question 2b

Will a capital gain or loss that arises for the Trustee pursuant to the Newly Amended Trust Deed at the time when the employees become absolutely entitled to Company X capital gains tax (CGT) event E5) 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 2b

Yes

Relevant facts and circumstances

Company X

Company X is an Australian incorporated company involved in a particular industry.

Company X is the head entity of the Company X income tax consolidated group (Company X TCG) consisting of itself and its wholly owned Australian subsidiaries.

Company X's remuneration strategy seeks to align management's objectives with those of shareholders. Part of Company X's renumeration strategy is to recognise long term performance by rewarding participants with equity incentive awards which allow them to share in the growth and in the value of the business. This is implemented through the following share plans (collectively the 'Plans'):

•                     Plan 1

•                     Plan 2.

Company X will continue to operate Plan 1 under which there are a number of outstanding awards, however all equity awards to employees after Plan 1 was adopted are being made under Plan 2.

The employing Australian entity (Employer Entity) is limited to Company X.

Consideration of the Australian tax treatment of cash contributions made by Company X to the Trust to satisfy awards made to foreign employees does not form part of this ruling.

The scope of this Ruling is limited to offers made to employees under the Company X Plan 1 and the Company X Plan 2 who engage in activities that derive assessable income in Australia.

The Board will not elect to settle vested Performance Rights and Share Appreciation Rights in cash.

Plan 1

Plan 1 was adopted by Company X's Annual General Meeting on a certain date. The terms and conditions of Plan 1 are set out in the Plan 1 Rules.

The terms on which Participants are invited to participate in Plan 1 are set out in the Plan 1 Offer Letter.

Broadly under Plan 1, the Board may issue an invitation to Employees granting to Employees a number of awards (for nil consideration), being the right to acquire a fully paid ordinary share in Company X (Share) (or to receive a Cash Equivalent Value, at the discretion of Company X) and will only vest once the board determines that any relevant conditions have been satisfied.

Plan 2

Plan 1 was adopted by Company X's Annual General Meeting on a certain date. The terms and conditions of Plan 2 are set out in the Plan 2 Rules.

The terms on which Participants are invited to participate in Plan 2 are set out in the Plan 2 Offer Letter.

Broadly under Plan 2, the Board may issue an invitation to Employees granting to Employees a number of awards (for nil consideration), being the right to acquire a fully paid ordinary share in Company X (Share) (or to receive a Cash Equivalent Value, at the discretion of Company X) and will only vest once the board determines that any relevant conditions have been satisfied.

Company X Limited Employee Share Trust (Trust)

The Trust was established for the sole purpose of subscribing for, acquiring, holding and transferring shares for the benefit of Participants under the Plans.

The trustee of the Trust (Trustee) is an external trustee acting in an independent capacity on behalf of the beneficiaries of the Trust.

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.

Under the Original Trust Deed, the Trust broadly operates as follows:

•                     Company X or a member of the Company X TCG will provide the Trustee with the funds required for the purchase of or subscription for shares in accordance with the Plans and all funds provided to the Trustee will constitute accretions to the corpus of the Trust and will not be repayable by the Trustee.

•                     Company X or a member of the Company X TCG is likely to contribute funds, by way of capital contribution to the Trust when written notice ('Dealing Notice') is provided by the Board to the Trustee.

•                     These funds will be used by the Trustee to acquire the shares in Company X either by on-market purchase or via a subscription for new shares in Company X based on the Dealing Notice provided by Company X.

•                     Allocated Shares acquired by the Trustee must be allocated to the relevant Participants and held on their behalf as soon as reasonably practicable where required to do so, or permitted, by the relevant Plan Rules. Each Participant will be the beneficial owner of and absolutely entitled to their Allocated Shares.

•                     Unallocated Shares must be held by the Trustee on behalf of Participants and employees generally. The Trustee must deal with each Unallocated Share in the manner set out in a Dealing Notice from the Board.

•                     If the Unallocated Share is a Forfeited Share, the Trustee must dispose of that particular Unallocated Share provided that such disposal is in accordance with the Trust Deed.

•                     If the Trustee is not an associate of Company X, the Trustee must not exercise voting rights in relation to Unallocated Shares.

•                     At any time after expiry of the Restriction Period (if any), the Trustee must transfer the relevant number of shares into the name of the relevant Participant or any third party nominated by the Participant (i.e. legal title) upon a Withdrawal Notice being lodged with and approved by the Board.

•                     The Trustee can sell Allocated shares on behalf of a Participant where permitted to do so by the Participant, less any taxes and costs incurred by the Trustee to sell these shares, with the Participant receiving the balance of the proceeds.

•                     The Trustee is not entitled to receive from the Trust Assets or any Participant any fees, charges, commission or other remuneration for operating or administering the Trust. However, Company X must pay or reimburse to the Trustee from Company X's own resources any such fees, charges, commission or other remuneration incurred by the Trustee, as Company X and the Trustee agree from time to time.

•                     In the event that the Trust is terminated, the Trustee must not pay any of the Surplus Assets to any Group Company. Group Company is defined as Company X and each of its subsidiaries.

On a particular date, the Trust Deed was amended and the amended Trust Deed took effect from that date onwards. On a particular date the amended Trust deed was amended and the Newly Amended Trust Deed took effect from that date onwards. The Newly Amended Trust Deed removed certain powers or duties that were considered not merely incidental to those activities described in paragraphs 130-85(4)(a) and (b) of the ITAA 1997. The Trustee confirmed that up to the date of amendment, the Trustee had not undertaken any of the powers or duties that had been removed by the amended Trust Deed and the Newly Amended Trust Deed.

Associated costs

Company X will incur various on-going costs associated with the services provided by the Trustee of the Trust in respect of the on-going administration and management of the Trust.

Company X has and will incur on-going administration costs associated with the company's accounting and legal advisors in relation to the Plans.

Company X will incur various costs in relation to the establishment of the Trust.

Company X will also incur costs in managing its own tax affairs in relation to the Employee Share Scheme.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 6-10

Income Tax Assessment Act 1997 section 102-20

Income Tax Assessment Act 1997 section 104-75

Income Tax Assessment Act 1997 section 130-90

Income Tax Assessment Act 1997 subsection 130-85(4)

Income Tax Assessment Act 1997 section 83A-10

Income Tax Assessment Act 1997 section 104-85

Does IVA apply to this private ruling?

Part IVA of the Income Tax Assessment Act 1936 contains anti-avoidance rules that can apply in certain circumstances where you or another taxpayer obtains a tax benefit, imputation benefit or diverted profits tax benefit in connection with an arrangement.

If Part IVA applies, the tax benefit or imputation benefit can be cancelled (for example, by disallowing a deduction that was otherwise allowable) or you or another taxpayer could be liable to the diverted profits tax.

We have not fully considered the application of Part IVA to the arrangement you asked us to rule on, or to an associated or wider arrangement of which that arrangement is part.

Reasons for decision

Question 1

Detailed reasoning

Assessable income includes both ordinary income and statutory income according to sections 6-5 and 6-10 of the ITAA 1997. Ordinary income is income according to ordinary concepts. Statutory income is income that is not ordinary income but is included in assessable income because of a specific provision of the ITAA 1997 or Income Tax Assessment Act 1936 (ITAA 1936).

As Chief Justice Jordan noted in Scott v Commissioner of Taxation (1935) 35 SR (NSW) 215 (Scott):

.. what forms of receipts are comprehended within it, and what principles are to be applied to ascertain how much of those receipts ought to be treated as income must be determined in accordance with the ordinary concepts and usages of mankind, except in so far as the statute states or indicates an intention that receipts which are not income in ordinary parlance are to be treated as income, or that special rules are to be applied for arriving at the taxable amount of receipts.[1]

Ordinary income

Section 6-5 provides that a taxpayer's assessable income includes income according to ordinary concepts. The expression 'income according to ordinary concepts' is not a defined term. However, case law has identified certain factors which may assist in determining whether a receipt is properly characterised as income according to ordinary concepts.

As a general rule, amounts received as a result of carrying on a business should represent ordinary income. However, receipts of a capital nature do not constitute income according to ordinary concepts, whether or not incurred in carrying on a business.

In GP International Pipecoaters v. Federal Commissioner of Taxation (1990) 170 CLR 124; (1990) 64 ALJR 392; (1990) 93 ALR 193; (1990) 21 ATR 1; 90 ATC 4413; [1990] HCA 25 (Pipecoaters), the High Court of Australia found that:

To determine whether a receipt is of an income or of a capital character, various factors may be relevant. Sometimes, the character of receipt will be revealed most clearly by their periodicity, regularity or recurrence; sometimes, by the character of a right or thing disposed of in exchange for the receipt; sometimes, by the scope of the transaction, venture or business in or by reason of which money is received and by the recipient's purpose in engaging in the transaction, venture or business.

The contributions made by Company X or any other member of the Company X TCG to the Trust forms part of the corpus of the Trust that will be applied for the sole purpose of acquiring, or subscribing for, shares for the benefit of the Participants under the Plans. The cash contributions received by the Trustee are therefore of a capital character.

It is irrelevant that, from Company X's perspective, the cash contribution may be deductible under section 8-1 of the ITAA 1997 because whether a receipt is income or capital depends on its objective character in the hands of the recipient, rather than the payer. This is made clear in Pipecoaters, where the High Court held that:

...although the amount expended on the construction of the plant was a capital expenditure, it does not follow that the taxpayer's receipt of the establishment costs was a receipt of capital.[2]

From the Trustee's perspective, the irretrievable cash contributions made by Company X are capital in nature and therefore not assessable to the Trust under section 6-5 of the ITAA 1997.

Statutory income

Section 10-5 provides a list of provisions of assessable income for section 6-10 purposes. None of the provisions apply to a cash contribution made by an employer to a trust established under an employee share scheme (ESS).

Therefore, the irretrievable cash contributions made by Company X or any other member of the Company X TCG to the Trustee of the Trust to fund the acquisition of, or subscription to, Company X shares are also not assessable income of the Trust pursuant to section 6-10 of the ITAA 1997.[3]

Question 2a

Detailed reasoning

You make a capital gain or capital loss if and only if a CGT event happens (section 102-20).

CGT event E5

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)). The time of the event is when the beneficiary becomes absolutely entitled to the asset (subsection 104-75(2)).

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 83-B or 83-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 interests under the Plans which are employee share schemes

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 a share in the company or a right to acquire a beneficial interest in a share in the company.

Paragraph 130-85(1)(a) is satisfied because:

•                     the participants of the Plans are beneficiaries of the Trust which was established for the purpose of administering the Plans

•                     Plan 1 is a scheme under which participants are provided with shares in relation to their employment that provides them with beneficial interests in the Company's shares; and

•                     Plan 2 is a scheme under which participants are granted rights in relation to their employment that provides them with the right to acquire shares in the Company.

Subdivision 83A-B or 83A-C applies to the shares and rights

Subsection 83A-20(1) states that Subdivision 83A-B applies to an ESS interest if you acquire the interest under an employee share scheme at a discount.

As shares and rights are provided to the participants of the Plans for no consideration, they are acquired by those participants at a discount and Subdivision 83A-B would apply to those ESS interests (unless the conditions in subsection 83A-105(1) are satisfied, in which case Subdivision 83A-C would apply instead).

Accordingly, paragraph 130-85(1)(b) is satisfied.

The shares and rights arose because of an interest the participants hold in an employee share trust

The participants of the Plans are beneficiaries of the Trust as they have an interest in the shares that are held in the Trust.

Subsection 995-1(1) defines 'employee share trust' as having the meaning given by subsection 130-85(4).

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; and

(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 paragraphs (a) and (b).

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

•                     acquires shares in the Company, and

•                     ensures those shares (which are 'ESS interests' under subsection 83A-10(1)) are provided under Plan 1 and Plan 2 (which both are 'employee share schemes' as defined in subsection 83A-10(2)) to participants (who are employees of Company X) by allocating those shares to the participants in accordance with the Trust Deed and the rules of the respective plans.

Taxation 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 merely incidental for the purposes of paragraph 130-85(4)(c).

Whether a 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's deed.

In the present case, the Trustee confirmed that up to the date of amendment, the Trustee had not undertaken any of the powers or duties that had been removed from the original Trust Deed by the amended Trust Deed (because they were not considered merely incidental to those activities described in paragraphs 130-85(4)(a) and (b) of the ITAA 1997). The Newly Amended Trust Deed contains only powers and duties that are merely incidental as required by subsection 130-85(4)(c).

Accordingly, the Commissioner considers the Trust to be an 'employee share trust' for the purposes of subsection 130-85(4) and paragraph 130-85(1)(c) is satisfied.

As all 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 allocated the shares under Plan 1 or granted rights under Plan 2 pursuant to subsection 130-85(2), and CGT event E5 will happen at that time.

Subsection 130-90

Subject to subsection 130-90(2), any capital gain or capital loss made by an employee share trust, to the extent that it results from CGT event E5, is disregarded if either subsection 130-90(1A) or subsection 130-90(1) applies.

Subsection 130-90(1A)

Subsection 130-90(1A) states that any capital gain or capital loss made by an employee share trust to the extent that it results from CGT event E5 is disregarded if:

•                     immediately before the event happens, an ESS interest is a CGT asset of the trust

•                     CGT event E5 happens because a beneficiary of the trust becomes absolutely entitled to the ESS interest as against the trustee and

•                     Subdivision 83A-B or 83A-C applies to the ESS interest.

Subsection 130-90(1A) applies to the shares held by the Trust for Plan 1 because:

•                     the shares (which are 'ESS interests' under subsection 83A 10(1)) are CGT assets of the Trust (shares are CGT assets pursuant to subsection 100-25(2))

•                     CGT event E5 happens to those shares as participants of Plan 1 become absolutely entitled to them pursuant to subsection 130-85(2) when they are allocated those shares by the Trustee, and

•                     as explained earlier, Subdivision 83A-B or 83A-C would apply to those shares as they are acquired by participants of Plan 1 at a discount.

Subsection 130-90(1)

Subsection 130-90(1) states that any capital gain or capital loss made an employee share trust to the extent that it results from a CGT event is disregarded if:

(a) the CGT event is CGT event E5

(b) the CGT event happens in relation to a share

(c) the beneficiary had acquired a beneficial interest in the share by exercising a right; and

(d) the beneficiary's beneficial interest in the right was an ESS interest to which Subdivision 83A-B or 83A-C applied.

Subsection 130-90(1) applies to the shares held by the Trust for Plan 2 because:

•                     by application of subsection 130-85(2), CGT event E5 happens when the rights are granted to participants of Plan 2

•                     CGT event E5 happens in relation to shares in the Company

•                     participants of Plan 2 acquire a beneficial interest in those shares when they exercise their rights, and

•                     as explained earlier, Subdivision 83A-B or 83A-C would apply to those rights as they are acquired by participants of Plan 2 at a discount.

Conclusion

As the requirements under subsection 130-90(1A) and subsection 130-90(1) are met in relation to the shares held by the Trust for the Plans, any capital gain or capital loss made by the Trust as a result of CGT event E5 happening will be disregarded (provided that the participants of the Plans do not acquire the shares for more than their cost base in the hands of the Trust at the time the CGT event happens).

Question 2b

Detailed reasoning

You make a capital gain or capital loss if and only if a CGT event happens (section 102-20).

CGT event E5

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)). The time of the event is when the beneficiary becomes absolutely entitled to the asset (subsection 104-75(2)).

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:

•                     the beneficiary acquires an ESS interest under an employee share scheme

•                     Subdivision 83-B or 83-C applies to the ESS interest, and

•                     the ESS interest is, or arises because of, an interest the beneficiary holds in an employee share trust.

Participants acquire ESS interests under the Plans which are employee share schemes

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 a share in the company or a right to acquire a beneficial interest in a share in the company.

Paragraph 130-85(1)(a) is satisfied because:

•                     the participants of the Plans are beneficiaries of the Trust which was established for the purpose of administering the Plans

•                     Plan 1 is a scheme under which participants are provided with shares in relation to their employment that provides them with beneficial interests in the Company's shares and

•                     Plan 2 is a scheme under which participants are granted rights in relation to their employment that provides them with the right to acquire shares in the Company.

Subdivision 83A-B or 83A-C applies to the shares and rights

Subsection 83A-20(1) states that Subdivision 83A-B applies to an ESS interest if you acquire the interest under an employee share scheme at a discount.

As shares and rights are provided to the participants of the Plans for no consideration, they are acquired by those participants at a discount and Subdivision 83A-B would apply to those ESS interests (unless the conditions in subsection 83A-105(1) are satisfied, in which case Subdivision 83A-C would apply instead).

Accordingly, paragraph 130-85(1)(b) is satisfied.

The shares and rights arose because of an interest the participants hold in an employee share trust

The participants of the Plans are beneficiaries of the Trust as they have an interest in the shares that are held in the Trust.

Subsection 995-1(1) defines 'employee share trust' as having the meaning given by subsection 130-85(4).

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; and

(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 paragraphs (a) and (b).

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

•                     acquires shares in the Company, and

•                     ensures those shares (which are 'ESS interests' under subsection 83A-10(1)) are provided under Plan 1 and Plan 2 (which both are 'employee share schemes' as defined in subsection 83A-10(2)) to participants (who are employees of Company X) by allocating those shares to the participants in accordance with the Trust Deed and the rules of the respective plans.

Taxation 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 merely incidental for the purposes of paragraph 130-85(4)(c).

Whether a 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's deed.

In the present case, the Trustee confirmed that up to the date of amendment, the Trustee had not undertaken any of the powers or duties that had been removed from the amended Trust Deed by the Newly Amended Trust Deed (because they were not considered merely incidental to those activities described in paragraphs 130-85(4)(a) and (b) of the ITAA 1997). The Newly Amended Trust Deed contains only powers and duties that are merely incidental as required by subsection 130-85(4)(c).

Accordingly, the Commissioner considers the Trust to be an 'employee share trust' for the purposes of subsection 130-85(4) and paragraph 130-85(1)(c) is satisfied.

As all 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 allocated the shares under Plan 1 or granted rights under Plan 2 pursuant to subsection 130-85(2), and CGT event E5 will happen at that time.

Subsection 130-90

Subject to subsection 130-90(2), any capital gain or capital loss made by an employee share trust, to the extent that it results from CGT event E5, is disregarded if either subsection 130-90(1A) or subsection 130-90(1) applies.

Subsection 130-90(1A)

Subsection 130-90(1A) states that any capital gain or capital loss made by an employee share trust to the extent that it results from CGT event E5 is disregarded if:

•                     immediately before the event happens, an ESS interest is a CGT asset of the trust

•                     CGT event E5 happens because a beneficiary of the trust becomes absolutely entitled to the ESS interest as against the trustee, and

•                     Subdivision 83A-B or 83A-C applies to the ESS interest.

Subsection 130-90(1A) applies to the shares held by the Trust for Plan 1 because:

•                     the shares (which are 'ESS interests' under subsection 83A 10(1)) are CGT assets of the Trust (shares are CGT assets pursuant to subsection 100-25(2))

•                     CGT event E5 happens to those shares as participants of Plan 1 become absolutely entitled to them pursuant to subsection 130-85(2) when they are allocated those shares by the Trustee, and

•                     as explained earlier, Subdivision 83A-B or 83A-C would apply to those shares as they are acquired by participants of Plan 1 at a discount.

Subsection 130-90(1)

Subsection 130-90(1) states that any capital gain or capital loss made an employee share trust to the extent that it results from a CGT event is disregarded if:

(a) the CGT event is CGT event E5

(b) the CGT event happens in relation to a share

(c) the beneficiary had acquired a beneficial interest in the share by exercising a right; and

(d) the beneficiary's beneficial interest in the right was an ESS interest to which Subdivision 83A-B or 83A-C applied.

Subsection 130-90(1) applies to the shares held by the Trust for Plan 2 because:

•                     by application of subsection 130-85(2), CGT event E5 happens when the rights are granted to participants of Plan 2

•                     CGT event E5 happens in relation to shares in the Company

•                     participants of Plan 2 acquire a beneficial interest in those shares when they exercise their rights, and

•                     as explained earlier, Subdivision 83A-B or 83A-C would apply to those rights as they are acquired by participants of Plan 2 at a discount.

Conclusion

As the requirements under subsection 130-90(1A) and subsection 130-90(1) are met in relation to the shares held by the Trust for the Plans, any capital gain or capital loss made by the Trust as a result of CGT event E5 happening will be disregarded (provided that the participants of the Plans do not acquire the shares for more than their cost base in the hands of the Trust at the time the CGT event happens).

[1] Scott at 220.

[2] Pipecoaters at 4420.

[3] This view is consistent with ATO ID 2002/965 Income Tax - Trustee not assessable on employer contributions made to it under the employer's employee share scheme, which found that: 'The funds provided to the Trustee are used in accordance with the Trust Deed and Plan Rules for the sole purpose of and under the employee share scheme. The contributions constitute capital receipts to the Trustee, and are not assessable under sections 6-5 or 6-10 of the ITAA 1997'.