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Edited version of private advice
Authorisation Number: 1052368535331
Date of advice: 5 March 2025
Ruling
Subject: Employee share scheme
Question 1
When you disposed of your ESS grant shares will the market value be calculated at the time when you became an Australian resident?
Answer 1
No.
As your ESS shares were acquired when you worked as an Australian employee. They are treated as income from sources in Australia and will be taxed in accordance with the ESS rules.
Therefore, as your Australian employer has made the election to tax the ESS interests at a deferred taxing point. The cost base will be the market value at the deferred taxing point under subsection 83A-110 (1) of the Income Tax Assessment Act 1997.
This ruling applies for the following period:
DD MM YY
The scheme commenced on:
DD MM YY
Relevant facts and circumstances
On the specified date, you arrived in Australia on a temporary work visa.
On arrival you commenced employment the company. The company is a subsidiary company 2, which is an international company listed the stock exchange.
As part of your remuneration, you received shares through as Employee Shares Scheme (ESS) grant. The granted shares are all discounted and traded on the stock exchange.
All shares were received in relation to your Australian employment with the company.
The company on your behalf have selected the deferred taxing point.
You have provided your ESS Annual Tax Statements which have multiply deferred taxing points as you have received shares at different stages of your employment. You received the following shares in the financial years specified below:
• Financial year: shares with an ESS value of $0
• Financial year: shares with an ESS value of $0
These amounts were included in your taxable income for the corresponding years and you paid income tax of:
• Financial year: $0
• Financial year: $0 (plus Division 293 tax of $0)
On the specified date, you obtained permanent residency and became an Australia tax resident.
On the specified date, you ceased your employment with the company.
On the specified date, you sold your shares.
Around the time of your residency status change, the market value of the shares dropped by approximately 0%.
You have provided the following cost base calculations in relation to your ESS shares:
• Market-based cost base calculation (upon residency change): $0.
• ESS value-based cost base calculation (from tax returns): $0.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 83A
Income Tax Assessment Act 1997 subsection 83A-110 (1)
Income Tax Assessment Act 1997 section 855-45 (1)