Commonwealth Consolidated Acts Commonwealth Consolidated ActsIncome Tax Assessment Act 1997
1 At the end of Part 2 - 40
Add:
Division 83A -- Employee share schemes
Table of Subdivisions
Guide to Division 83A
83A - A Objects of Division and key concepts
83A - B Immediate inclusion of discount in assessable income
83A - C Deferred inclusion of gain in assessable income
83A - D Deduction for employer
83A - 1 What this Division is about
Your assessable income includes discounts on shares, rights and stapled securities you (or your associate) acquire under an employee share scheme.
You may be entitled:
(a) to have the amount included in your assessable income reduced; or
(b) to have the income year in which it is included deferred.
Subdivision 83A - A -- Objects of Division and key concepts
Table of sections
83A - 5 Objects of Division
83A - 10 Meaning of ESS interest and employee share scheme
The objects of this Division are:
(a) to ensure that benefits provided to employees under * employee share schemes are subject to income tax at the employees' marginal rates under * income tax law (instead of being subject to * fringe benefits tax law); and
(b) to increase the extent to which the interests of employees are aligned with those of their employers, by providing a tax concession to encourage lower and middle income earners to acquire * shares under such schemes.
83A - 10 Meaning of ESS interest and employee share scheme
(1) An ESS interest , in a company, is a beneficial interest in:
(a) a * share in the company; or
(b) a right to acquire a beneficial interest in a share in the company.
(2) An employee share scheme is a * scheme under which * ESS interests in a company are provided to employees, or * associates of employees, (including past or prospective employees) of:
(a) the company; or
(b) * subsidiaries of the company;
in relation to the employees' employment.
Note: See section 83A - 325 for relationships similar to employment.
Subdivision 83A - B -- Immediate inclusion of discount in assessable income
83A - 15 What this Subdivision is about
Generally, a discount you receive on shares, rights or stapled securities you acquire under an employee share scheme is included in your assessable income when you acquire the beneficial interest in those shares, rights or securities.
You may be entitled to reduce the amount included in your assessable income if you meet certain conditions which seek to limit the concession to genuine schemes broadly available to all permanent employees who do not already have anything other than a minor interest in their employer.
The income year in which you are taxed may be deferred if there is a real risk of forfeiture, or you acquired the shares or securities under particular salary sacrifice arrangements (see Subdivision 83A - C).
If you are a foreign resident, only the part of the discount that relates to your employment in Australia is included in your assessable income.
Table of sections
Operative provisions
83A - 20 Application of Subdivision
83A - 25 Discount to be included in assessable income
83A - 30 Amount for which discounted ESS interest acquired
83A - 35 Reduction of amounts included in assessable income
83A - 20 Application of Subdivision
(1) This Subdivision applies to an * ESS interest if you acquire the interest under an * employee share scheme at a discount.
Note 1: This Subdivision does not apply if Subdivision 83A - C applies: see section 83A - 105.
Note 2: If an associate of yours acquires an interest in relation to your employment, this Division applies as if you, rather than your associate, acquired the interest: see section 83A - 305.
Note 3: Regulations made for the purposes of section 83A - 315 may be relevant to working out whether you acquire the ESS interest at a discount.
(2) However, this Subdivision does not apply if the * ESS interest is a beneficial interest in a * share that you acquire as a result of exercising a right, if you acquired a beneficial interest in the right under an * employee share scheme.
83A - 25 Discount to be included in assessable income
(1) Your assessable income for the income year in which you acquire the * ESS interest includes the discount given in relation to the interest.
(2) Treat an amount included in your assessable income under subsection ( 1) as being from a source other than an * Australian source to the extent that it relates to your employment outside Australia.
Note: For the CGT treatment of employee share schemes, see Subdivision 130 - D.
83A - 30 Amount for which discounted ESS interest acquired
For the purposes of this Act (other than this Division), the * ESS interest (and the * share or right of which it forms part) is taken to have been acquired for its * market value (rather than for its discounted value).
Note: Regulations made for the purposes of section 83A - 315 may substitute a different amount for the market value of the ESS interest.
83A - 35 Reduction of amounts included in assessable income
Reduction and income test
(1) Reduce the total amount included in your assessable income under subsection 83A - 25(1) for an income year by the total of the amounts included in your assessable income under that subsection, for the income year, for * ESS interests to which subsections ( 3) to (9) of this section apply.
(2) However:
(a) do not reduce the total amount by more than $1,000; and
(b) only make the reduction if the sum of the following does not exceed $180,000:
(i) your taxable income for the income year (including any amount that would be included in your taxable income if you disregarded this section);
(ii) your * reportable fringe benefits total for the income year;
(iii) your * reportable superannuation contributions (if any) for the income year;
(iv) your * total net investment loss for the income year.
Employment
(3) This subsection applies to an * ESS interest in a company if, when you acquire the interest, you are employed by:
(a) the company; or
(b) a * subsidiary of the company.
Employee share scheme relates only to ordinary shares
(4) This subsection applies to an * ESS interest you acquire under an * employee share scheme if, when you acquire the interest, all the ESS interests available for acquisition under the scheme relate to ordinary * shares.
Integrity rule about share trading and investment companies.
(5) This subsection applies to an * ESS interest in a company unless, when you acquire the interest:
(a) the predominant business of the company (whether or not stated in its constituent documents) is the acquisition, sale or holding of * shares, securities or other investments (whether directly or indirectly through one or more companies, partnerships or trusts); and
(b) you are employed by the company; and
(c) you are also employed by any other company that is:
(i) a * subsidiary of the first company; or
(ii) a holding company (within the meaning of the Corporations Act 2001 ) of the first company; or
(iii) a subsidiary of a holding company (within the meaning of the Corporations Act 2001 ) of the first company.
Scheme must be non - discriminatory
(6) This subsection applies to an * ESS interest you acquire under an * employee share scheme if, when you acquire the interest, both:
(a) the employee share scheme; and
(b) any scheme for the provision of financial assistance in respect of acquisitions of ESS interests under the employee share scheme;
are operated on a non - discriminatory basis in relation to at least 75% of the permanent employees of your employer who have completed at least 3 years of service (whether continuous or non - continuous) with your employer and who are Australian residents.
No risk of losing interest or share under the conditions of the scheme
(7) This subsection applies to an * ESS interest you acquire under an * employee share scheme if, when you acquire the interest:
(a) if the ESS interest is a beneficial interest in a * share--there is no real risk that, under the conditions of the scheme, you will forfeit or lose the ESS interest (other than by disposing of it); or
(b) if the ESS interest is a beneficial interest in a right to acquire a beneficial interest in a * share:
(i) there is no real risk that, under the conditions of the scheme, you will forfeit or lose the ESS interest (other than by disposing of it, exercising the right or letting the right lapse); and
(ii) there is no real risk that, under the conditions of the scheme, if you exercise the right, you will forfeit or lose the beneficial interest in the share (other than by disposing of it).
Minimum holding period
(8) This subsection applies to an * ESS interest you acquire under an * employee share scheme if, at all times during the period that:
(a) starts when you acquire the interest; and
(b) ends at the earlier of:
(i) 3 years later; and
(ii) when you cease being employed by your employer;
the scheme is operated so that:
(c) you are not permitted to dispose of:
(i) any ESS interest (the scheme interest ) you acquire under the scheme; or
(ii) a beneficial interest in a * share you acquire as a result of a scheme interest;
before the earlier of:
(iii) the end of the period of 3 years after you acquire the scheme interest; and
(iv) when you cease being employed by your employer; and
(d) everyone else who acquires ESS interests under the scheme is subject to a corresponding restriction.
Note: This subsection is taken to apply in the case of a takeover or restructure: see subsection 83A - 130(3).
5% limit on shareholding and voting power
(9) This subsection applies to an * ESS interest in a company if, immediately after you acquire the interest:
(a) you do not hold a beneficial interest in more than 5% of the * shares in the company; and
(b) you are not in a position to cast, or to control the casting of, more than 5% of the maximum number of votes that might be cast at a general meeting of the company.
Subdivision 83A - C -- Deferred inclusion of gain in assessable income
83A - 100 What this Subdivision is about
If there is a real risk you might forfeit the share, right or stapled security you acquired under an employee share scheme, you don't include the discount in your assessable income when you acquired it. Instead, in the first income year you are able to dispose of the share, right or security, your assessable income will include any gain you have made to that time. If you cease employment earlier, or if 7 years pass, the gain is included in that income year instead.
A share or stapled security you acquire under salary sacrifice arrangements can also be subject to this deferred taxing point if you get no more than $5,000 worth of shares under those arrangements.
Table of sections
Main provisions
83A - 105 Application of Subdivision
83A - 110 Amount to be included in assessable income
83A - 115 ESS deferred taxing point--shares
83A - 120 ESS deferred taxing point--rights to acquire shares
83A - 125 Tax treatment of ESS interests held after ESS deferred taxing points
Takeovers and restructures
83A - 130 Takeovers and restructures
83A - 105 Application of Subdivision
Scope of Subdivision
(1) This Subdivision applies, and Subdivision 83A - B does not apply, to an * ESS interest in a company if:
(a) Subdivision 83A - B would, apart from this section, apply to the interest (see section 83A - 20); and
(b) subsections 83A - 35(3), (4), (5) and (9) apply to the interest; and
(c) if the interest is a beneficial interest in a * share:
(i) subsection ( 2) of this section applies to the interest; and
(ii) subsection ( 3) or (4) applies to the interest; and
(d) if the interest is a beneficial interest in a right to acquire a beneficial interest in a share-- subsection ( 3) applies to the interest.
Note: Subsections 83A - 35(3), (4), (5), and (9) contain conditions relating to the following:
(a) your employment;
(b) the types of shares available under the employee share scheme;
(c) share trading and investment companies;
(d) your shareholding and voting power in the company.
Broad availability of schemes
(2) This subsection applies to an * ESS interest you acquire under an * employee share scheme if, when you acquire the interest, at least 75% of the permanent employees of your employer who have completed at least 3 years of service (whether continuous or non - continuous) with your employer and who are Australian residents are, or at some earlier time had been, entitled to acquire:
(a) ESS interests under the scheme; or
(b) ESS interests in:
(i) your employer; or
(ii) a holding company (within the meaning of the Corporations Act 2001 ) of your employer;
under another employee share scheme.
Real risk of losing interest or share under the conditions of the scheme
(3) This subsection applies to an * ESS interest you acquire under an * employee share scheme if, when you acquire the interest:
(a) if the ESS interest is a beneficial interest in a * share--there is a real risk that, under the conditions of the scheme, you will forfeit or lose the ESS interest (other than by disposing of it); or
(b) if the ESS interest is a beneficial interest in a right to acquire a beneficial interest in a share:
(i) there is a real risk that, under the conditions of the scheme, you will forfeit or lose the ESS interest (other than by disposing of it, exercising the right or letting the right lapse); or
(ii) there is a real risk that, under the conditions of the scheme, if you exercise the right, you will forfeit or lose the beneficial interest in the share (other than by disposing of it).
Salary sacrifice arrangement
(4) This subsection applies to an * ESS interest you acquire under an * employee share scheme during an income year at a discount if:
(a) the interest is provided:
(i) because you agreed to acquire the interest in return for a reduction in your salary or wages that would not have happened apart from the agreement; or
(ii) as part of your remuneration package, in circumstances where it is reasonable to conclude that your salary or wages would be greater if the interest was not made part of that package; and
(b) at the time you acquire the interest:
(i) the discount equals the * market value of the ESS interest; and
(ii) all of the ESS interests available for acquisition under the scheme are ESS interests to which subsection ( 3) applies, beneficial interests in * shares, or both; and
(iii) the governing rules of the scheme expressly state that this Subdivision applies to the scheme (subject to the requirements of this Act); and
(c) the total * market value of the * ESS interests in your employer and any holding company (within the meaning of the Corporations Act 2001 ) of your employer:
(i) that you acquire during the year under any employee share scheme or schemes; and
(ii) to which both this Subdivision and this subsection apply;
does not exceed $5,000.
(5) For the purposes of paragraph ( 4)(c), work out the * market value of each * ESS interest as at the time you acquire it.
Note: Regulations made for the purposes of section 83A - 315 may substitute a different amount for the market value of the ESS interest.
83A - 110 Amount to be included in assessable income
(1) Your assessable income for the income year in which the * ESS deferred taxing point for the * ESS interest occurs includes the * market value of the interest at the ESS deferred taxing point, reduced by the * cost base of the interest.
Note: Regulations made for the purposes of section 83A - 315 may substitute a different amount for the market value of the ESS interest.
(2) Treat an amount included in your assessable income under subsection ( 1) as being from a source other than an * Australian source to the extent that it relates to your employment outside Australia.
Note: For the CGT treatment of employee share schemes, see Subdivision 130 - D.
83A - 115 ESS deferred taxing point--shares
Scope
(1) This section applies if the * ESS interest is a beneficial interest in a * share.
Meaning of ESS deferred taxing point
(2) The ESS deferred taxing point for the * ESS interest is the earliest of the times mentioned in subsections ( 4) to (6).
(3) However, the ESS deferred taxing point for the * ESS interest is instead the time you dispose of the interest, if that time occurs within 30 days after the time worked out under subsection ( 2).
No restrictions on disposing of share
(4) The first possible taxing point is the earliest time when:
(a) there is no real risk that, under the conditions of the * employee share scheme, you will forfeit or lose the * ESS interest (other than by disposing of it); and
(b) if, at the time you acquired the interest, the scheme genuinely restricted you immediately disposing of the interest--the scheme no longer so restricts you.
Cessation of employment
(5) The 2nd possible taxing point is the time when the employment in respect of which you acquired the interest ends.
Maximum time period for deferral
(6) The 3rd possible taxing point is the end of the 7 year period starting when you acquired the interest.
83A - 120 ESS deferred taxing point--rights to acquire shares
Scope
(1) This section applies if the * ESS interest is a beneficial interest in a right to acquire a beneficial interest in a * share.
Meaning of ESS deferred taxing point
(2) The ESS deferred taxing point for the * ESS interest is the earliest of the times mentioned in subsections ( 4) to (7).
(3) However, the ESS deferred taxing point for the * ESS interest is:
(a) the time you dispose of the ESS interest (other than by exercising the right); or
(b) if you exercise the right--the time you dispose of the beneficial interest in the * share;
if that time occurs within 30 days after the time worked out under subsection ( 2).
No restrictions on disposing of right
(4) The first possible taxing point is the earliest time when:
(a) you have not exercised the right; and
(b) there is no real risk that, under the conditions of the * employee share scheme, you will forfeit or lose the * ESS interest (other than by disposing of it, exercising the right or letting the right lapse); and
(c) if, at the time you acquired the ESS interest, the scheme genuinely restricted you immediately disposing of the ESS interest--the scheme no longer so restricts you.
Cessation of employment
(5) The 2nd possible taxing point is the time when the employment in respect of which you acquired the interest ends.
Maximum time period for deferral
(6) The 3rd possible taxing point is the end of the 7 year period starting when you acquired the interest.
No restrictions on exercising right and disposing of share
(7) The 4th possible taxing point is the earliest time when:
(a) there is no real risk that, under the conditions of the scheme, you will forfeit or lose the * ESS interest (other than by disposing of it, exercising the right or letting the right lapse); and
(b) if, at the time you acquired the ESS interest, the scheme genuinely restricted you immediately exercising the right--the scheme no longer so restricts you; and
(c) there is no real risk that, under the conditions of the scheme, if you exercise the right, you will forfeit or lose the beneficial interest in the * share (other than by disposing of it); and
(d) if, at the time you acquired the ESS interest, the scheme genuinely restricted you immediately disposing of the beneficial interest in the share if you exercised the right--the scheme no longer so restricts you.
83A - 125 Tax treatment of ESS interests held after ESS deferred taxing points
For the purposes of this Act (other than this Division), the * ESS interest (and the * share or right of which it forms part) is taken to have been acquired immediately after the * ESS deferred taxing point for the interest for its * market value, unless the ESS deferred taxing point occurs at the time the interest is disposed of.
Note: Regulations made for the purposes of section 83A - 315 may substitute a different amount for the market value of the ESS interest.
83A - 130 Takeovers and restructures
Object and scope
(1) The object of this section is to allow this Division to continue to apply if:
(a) at least one of the following applies:
(i) an * arrangement (the takeover ) is entered into that is intended to result in a company (the old company ) becoming a * 100% subsidiary of another company;
(ii) * ESS interests in a company (the old company ) acquired under * employee share schemes can reasonably be regarded as having been replaced, wholly or partly, by ESS interests in one or more other companies as a result of a change (the restructure ) in the ownership (including the structure of the ownership) of the old company; and
(b) just before the takeover or restructure, you held ESS interests (the old interests ) in the old company that you acquired under an employee share scheme.
Treat new interests as continuations of old interests
(2) For the purposes of this Division, treat any * ESS interests (the new interests ) in a company (the new company ) that you acquire in connection with the takeover or restructure as a continuation of the old interests, to the extent that:
(a) as a result of the arrangement or change, you stop holding the old interests; and
(b) the new interests can reasonably be regarded as matching any of the old interests.
Note: In determining to what extent something can reasonably be regarded as matching any of the old interests, one of the factors to consider is the respective market values of that thing and of the old interests.
(3) Subsection 83A - 35(8) (about the 3 year rule) is taken to apply to the * ESS interests.
(4) Subsections ( 2) and (3) only apply if the new interests relate to ordinary * shares.
Old interest not matched by new interests
(5) For the purposes of this Division, treat yourself as having disposed of the old interests to the extent that, in connection with the takeover or restructure, you acquire anything that:
(a) can reasonably be regarded as matching any of the old interests; but
(b) is not treated by subsection ( 2) as a continuation of those interests.
Continuation of your employment
(6) For the purposes of this Division, treat your employment by:
(a) the new company; or
(b) a * subsidiary of the new company; or
(c) a holding company (within the meaning of the Corporations Act 2001 ) of the new company; or
(d) a subsidiary of a holding company (within the meaning of the Corporations Act 2001 ) of the new company;
as a continuation of the employment in respect of which you acquired the old interests.
Apportionment of cost base of old interests
(7) Treat yourself as having given, as consideration for the assets mentioned in subsection ( 8), the amount worked out by apportioning among those assets, according to their respective * market values immediately after the takeover or restructure, the total of:
(a) the * cost bases of the old interests when you stop holding them; and
(b) the cost bases of the assets mentioned in paragraph ( 8)(b) immediately after the takeover or restructure (ignoring the effect of this subsection).
(8) The assets are:
(a) the things that:
(i) you acquired in connection with the takeover or restructure; and
(ii) can reasonably be regarded as matching the old interests;
(including all of the new interests); and
(b) in a case covered by subparagraph ( 1)(a)(ii)--any * ESS interests in the old company that:
(i) you held just before, and continue to hold just after, the restructure; and
(ii) that can reasonably be regarded as matching the old interests.
Exceptions
(9) This section only applies if:
(a) at or about the time you acquire the new interests, you are employed as mentioned in subsection ( 6); and
(b) at the time you acquire the new interests:
(i) you do not hold a beneficial interest in more than 5% of the * shares in the new company; and
(ii) you are not in a position to cast, or to control the casting of, more than 5% of the maximum number of votes that might be cast at a general meeting of the new company.
Subdivision 83A - D -- Deduction for employer
83A - 200 What this Subdivision is about
You can deduct an amount for shares, rights or stapled securities you provide to your employees under an employee share scheme if they are eligible for a reduction in their assessable income under section 83A - 35. The amount you can deduct is equal to that reduction.
You must defer any deduction you are entitled to for amounts you provide to finance your employees acquiring interests in shares, rights or stapled securities under an employee share scheme until the employees have actually acquired those interests.
Table of sections
Operative provisions
83A - 205 Deduction for employer
83A - 210 Timing of general deductions
83A - 205 Deduction for employer
(1) You can deduct an amount for an income year if:
(a) during the year you provided one or more * ESS interests to an individual under an * employee share scheme; and
(b) you did so as:
(i) the employer of the individual; or
(ii) a holding company (within the meaning of the Corporations Act 2001 ) of the employer of the individual; and
(c) section 83A - 35 applies to reduce the amount included in the individual's assessable income under subsection 83A - 25(1) in relation to some or all of the interests.
(2) Disregard paragraph 83A - 35(2)(b) (income test) for the purposes of paragraph ( 1)(c) of this section.
(3) The amount of the deduction is the amount of the reduction mentioned in paragraph ( 1)(c).
Deduction to be apportioned if interest provided by multiple entities
(4) The amount of the deduction worked out under subsection ( 3) must be apportioned between 2 or more entities on a reasonable basis if the entities jointly provide an * ESS interest for which an amount can be deducted under subsection ( 1).
83A - 210 Timing of general deductions
If:
(a) at a particular time, you provide another entity with money or other property:
(i) under an * arrangement; and
(ii) for the purpose of enabling an individual (the ultimate beneficiary ) to acquire, directly or indirectly, an * ESS interest under an * employee share scheme in relation to the ultimate beneficiary's employment (including past or prospective employment); and
(b) that particular time occurs before the time (the acquisition time ) the ultimate beneficiary acquires the * ESS interest;
then, for the purpose of determining the income year (if any) in which you can deduct an amount in respect of the provision of the money or other property, you are taken to have provided the money or other property at the acquisition time.
Subdivision 83A - E -- Miscellaneous
Table of sections
83A - 305 Acquisition by associates
83A - 310 Forfeiture etc. of ESS interest
83A - 315 Market value of ESS interest
83A - 320 Interests in a trust
83A - 325 Application of Division to relationships similar to employment
83A - 330 Application of Division to ceasing employment
83A - 335 Application of Division to stapled securities
83A - 340 Application of Division to indeterminate rights
83A - 305 Acquisition by associates
If an * associate (other than an * employee share trust) of an individual acquires an * ESS interest in relation to the individual's employment (including past or prospective employment), then, for the purposes of this Division:
(a) treat the interest as having being acquired by the individual (instead of the associate); and
(b) treat any circumstance, right or obligation existing or not existing in relation to the interest in relation to the associate as existing or not existing in relation to the individual; and
(c) treat anything done or not done by or in relation to the associate in relation to the interest as being done or not done by or in relation to the individual.
Example 1: The following are attributed to the employee, rather than to the associate:
(a) the associate's voting rights;
(b) the associate's ability or inability to dispose of the ESS interest;
(c) whether there is a real risk that the associate may lose the ESS interest;
(d) the associate's cost base for the ESS interest.
Example 2: If the associate disposes of the ESS interest, the employee is taken to have disposed of the ESS interest instead.
83A - 310 Forfeiture etc. of ESS interest
This Division (apart from this Subdivision) is taken never to have applied in relation to an * ESS interest acquired by an individual under an * employee share scheme if:
(a) disregarding this section, an amount is included in the individual's assessable income under this Division in relation to the interest; and
(b) either:
(i) the individual forfeits the interest; or
(ii) in the case of an ESS interest that is a beneficial interest in a right--the individual forfeits or loses the interest (without having disposed of the interest or exercised the right); and
(c) the forfeiture or loss is not the result of:
(i) a choice made by the individual (other than a choice by that individual to cease particular employment); or
(ii) a condition of the scheme that has the direct effect of protecting (wholly or partly) the individual against a fall in the * market value of the interest.
83A - 315 Market value of ESS interest
(1) Whenever this Division uses the * market value of an * ESS interest, instead use the amount specified in the regulations for the purposes of this section in relation to the interest, if the regulations specify such an amount.
(2) To avoid doubt, apply the rule in subsection ( 1) to the * market value component of any calculation for the purposes of this Division that involves market value.
Example: If the regulations specify an amount in relation to an ESS interest, use that amount instead of the market value of the interest in working out:
(a) whether there is a discount given in relation to interest; and
(b) if so--the amount of the discount.
83A - 320 Interests in a trust
(1) This section applies if, at a time:
(a) you hold an interest in a trust whose assets include * shares; and
(b) that interest corresponds to a particular number of the shares (even if the interest does not correspond to particular shares).
(2) For the purposes of this Division, treat yourself as holding at that time a beneficial interest in each of a number of the * shares included in the assets of the trust equal to the number mentioned in paragraph ( 1)(b).
(3) If there are 2 or more classes of * shares included in the assets of the trust, this section operates separately in relation to each class as if the shares in that class were all the shares included in the assets of the trust.
(4) This section applies to rights to acquire beneficial interests in * shares in the same way it applies to shares.
Note: For the CGT treatment of employee share schemes, see Subdivision 130 - D.
83A - 325 Application of Division to relationships similar to employment
This Division applies to an individual covered by column 1 of an item in the table as if:
(a) he or she were employed by the entity referred to in column 2 of that item; and
(b) the thing referred to column 3 of that item constituted that employment.
Application of Division to relationships similar to employment | |||
Item | Column 1 This Division applies to an individual who: | Column 2 as if he or she were employed by: | Column 3 and this constituted that employment: |
1 | receives, or is entitled to receive, * work and income support withholding payments (otherwise than as an employee) | the entity that pays or provides the work and income support withholding payments (or is liable to do so) | the relationship because of which the entity pays or provides the work and income support withholding payments to the individual (or is liable to do so). |
2 | is engaged in service in a foreign country as the holder of an office | the entity by whom the individual is so engaged | the holding of the office. |
3 | provides services to an entity (other than services covered by a previous item in this table and services provided as an employee) | the entity | the * arrangement between the individual and the entity under which those services are provided. |
83A - 330 Application of Division to ceasing employment
For the purposes of this Division, you are treated as ceasing employment when you are no longer employed by any of the following:
(a) your employer in that employment;
(b) a holding company (within the meaning of the Corporations Act 2001 ) of your employer;
(c) a * subsidiary of your employer;
(d) a * subsidiary of a holding company (within the meaning of the Corporations Act 2001 ) of your employer.
83A - 335 Application of Division to stapled securities
(1) This Division applies in relation to a stapled security in the same way as it applies in relation to a * share in a company, if at least one of the * ownership interests that are stapled together to form the stapled security is a share in the company.
Note: This means the Division also applies to rights to acquire such a stapled security in the same way it applies to rights to acquire a share.
(2) This Division applies in relation to a stapled security in the same way as it applies in relation to an ordinary * share in a company, if at least one of the * ownership interests that are stapled together to form the stapled security is an ordinary share in the company.
(3) For the purposes of this Division, in relation to a stapled security or right to acquire a beneficial interest in a stapled security, a company is taken to include (as part of the company) each * stapled entity for the stapled security, if at least one of the * ownership interests that are stapled together to form the stapled security is a * share in the company.
83A - 340 Application of Division to indeterminate rights
(1) This section applies if:
(a) you acquire a beneficial interest in a right; and
(b) the right later becomes a right to acquire a beneficial interest in a * share.
Example 1: You acquire a right to acquire, at a future time:
(a) shares with a specified total value, rather than a specified number of shares; or
(b) an indeterminate number of shares.
Example 2: You acquire a right under which the provider must provide you with either ESS interests or cash, whichever the provider chooses.
(2) This Division applies as if the right had always been a right to acquire the beneficial interest in the * share.
Taxation Administration Act 1953
2 At the end of Division 14 in Schedule 1
Add:
Subdivision 14 - C -- Shares and rights under employee share schemes
Table of sections
14 - 155 Liability for TFN withholding tax (ESS)
14 - 160 Employer may give individual tax file numbers to provider
14 - 165 Provider may recover TFN withholding tax (ESS) from individual
14 - 170 Application of rules in Division 18
14 - 175 Overpayment of TFN withholding tax (ESS)
14 - 180 Application of certain provisions of Division 83A of the Income Tax Assessment Act 1997
14 - 155 Liability for TFN withholding tax (ESS)
(1) Tax ( TFN withholding tax (ESS) ) imposed by the Income Tax (TFN Withholding Tax (ESS)) Act 2009 is payable if:
(a) a company (the provider ) provides one or more * ESS interests to an individual under an * employee share scheme; and
(b) as a result, an amount is included in the individual's assessable income under Division 83A of the Income Tax Assessment Act 1997 for an income year (taking into account subsection ( 2) of this section) ; and
(c) the individual has quoted neither of the following to the provider before the end of the income year:
(i) if the individual acquired the interests in relation to any services provided to the provider, or to a * subsidiary of the provider, in the course or furtherance of an * enterprise * carried on by the individual--the individual's * ABN;
(ii) in any case--the individual's * tax file number.
(2) For the purposes of paragraph ( 1)(b), disregard section 83A - 35 of the Income Tax Assessment Act 1997 (about reducing the amount included in the individual's assessable income).
Note: Disregard the 30 day rule in subsections 83A - 115(3) and 83A - 120(3) of the Income Tax Assessment Act 1997 for the purposes of this Subdivision: see subsection 392 - 5(6) in this Schedule.
(3) The * TFN withholding tax (ESS) is payable by the provider.
(4) The * TFN withholding tax (ESS) is due and payable at the end of 21 days after the end of the income year referred to in paragraph ( 1)(b).
Note 1: When it is due and payable, the TFN withholding tax (ESS) is payable to the Commissioner: see paragraph 255 - 5(1)(b).
Note 2: The provider must pay the TFN withholding tax (ESS) to the Commissioner in accordance with Subdivision 16 - B: see subsection 16 - 70(4). If any of it remains unpaid, the provider is liable to pay general interest charge: see section 16 - 80.
Note 3: The Commissioner may defer the time at which TFN withholding tax (ESS) becomes due and payable: see section 255 - 10.
14 - 160 Employer may give individual tax file numbers to provider
(1) The individual is taken to have authorised a * subsidiary (the employer ) of the provider to inform the provider of the individual's * tax file number if:
(a) the individual has made a * TFN declaration in relation to the employer; and
(b) some or all of the * ESS interests mentioned in paragraph 14 - 155(1)(a) were provided to the individual in relation to the individual's employment by the employer.
(2) If the employer does so, the individual is taken, for the purposes of this Subdivision and Division 392 (Employee share scheme reporting), to have quoted his or her * tax file number to the provider.
14 - 165 Provider may recover TFN withholding tax (ESS) from individual
(1) The provider may recover from the individual as a debt any of the * TFN withholding tax (ESS) the provider pays.
(2) The provider is entitled to set off an amount that the provider can recover from the individual under this section against a debt due by the provider to the individual.
14 - 170 Application of rules in Division 18
These provisions:
(a) subsection 18 - 15(1) (about credits for amounts withheld from withholding payments); and
(b) sections 18 - 65 and 18 - 70 (about refunds of amounts withheld in error);
apply as if any of the * TFN withholding tax (ESS) that has been paid were an amount withheld under section 12 - 35 from a * withholding payment made to the individual and covered by that section.
14 - 175 Overpayment of TFN withholding tax (ESS)
If * TFN withholding tax (ESS) has been overpaid:
(a) the Commissioner must refund the amount overpaid; and
(b) the individual is not entitled to a credit under section 18 - 15 in respect of the amount overpaid.
14 - 180 Application of certain provisions of Division 83A of the Income Tax Assessment Act 1997
The following provisions of the Income Tax Assessment Act 1997 have effect for the purposes of this Subdivision in the same way as they have for the purposes of Division 83A of that Act:
(a) section 83A - 130 (about takeovers and restructures);
(b) section 83A - 305 (about associates);
(c) section 83A - 320 (about trusts);
(d) section 83A - 325 (about relationships similar to employment);
(e) section 83A - 335 (about stapled securities);
(f) section 83A - 340 (about indeterminate rights).
3 After subsection 16 - 70(3) in Schedule 1 (before the note)
Insert:
(4) An entity that must pay an amount to the Commissioner under Subdivision 14 - C must do so in accordance with sections 16 - 80 and 16 - 85.
4 Section 16 - 80 in Schedule 1
Omit "or (3)", substitute ", (3) or (4)".
5 After Division 391 in Schedule 1
Insert:
Division 392 -- Employee share scheme reporting
Table of Subdivisions
Guide to Division 392
392 - A Statements
392 - B Miscellaneous
392 - 1 What this Division is about
A company that provides ESS interests to an individual under an employee share scheme during a year must, at the end of the year (and, in certain cases, at the end of a later year), give certain information to the Commissioner and to the individual.
Note: For the tax treatment of employee share schemes, see Division 83A of the Income Tax Assessment Act 1997 .
Subdivision 392 - A -- Statements
Table of sections
392 - 5 Statements by providers
392 - 10 Change or omission in information given to the Commissioner
392 - 5 Statements by providers
Statements
(1) An entity (the provider ) must give a statement to the Commissioner and to an individual for a * financial year if:
(a) both of the following subparagraphs apply:
(i) the provider provides * ESS interests to the individual during the year;
(ii) Subdivision 83A - B or 83A - C of the Income Tax Assessment Act 1997 (about employee share schemes) applies to the interests; or
(b) all of the following subparagraphs apply:
(i) the provider has provided ESS interests to the individual (whether during the year or during an earlier year);
(ii) Subdivision 83A - C of the Income Tax Assessment Act 1997 (about employee share schemes) applies to the interests;
(iii) the * ESS deferred taxing point for the interests occurs during the year.
Note: Section 286 - 75 provides an administrative penalty for breach of this subsection.
Form of statements
(2) The statement must be in the * approved form.
(3) The * approved form may require the statement to contain the following information:
(a) the provider's * ABN;
(b) the following information about the individual:
(i) the individual's name and address;
(ii) if the individual has quoted his or her * tax file number to the provider--that tax file number;
(iii) if the individual acquired the interests in relation to any services provided to the provider, or to a * subsidiary of the provider, in the course or furtherance of an * enterprise * carried on by the individual, and the individual has * quoted his or her ABN to the provider--that ABN;
(c) the following information about any interests to which both paragraph ( 1)(a) of this section and Subdivision 83A - B of the Income Tax Assessment Act 1997 apply:
(i) the number of the interests;
(ii) the amount paid, at or before the time of acquisition, towards acquiring the interests;
(iii) the provider's estimate of the * market value of the interests at the time of acquisition;
(iv) the amount of * TFN withholding tax (ESS) paid or payable by the provider in respect of the interests during the year;
(d) the following information about any interests to which both paragraph ( 1)(a) of this section and Subdivision 83A - C of the Income Tax Assessment Act 1997 apply:
(i) the number of the interests;
(ii) the amount paid, at or before the time of acquisition, towards acquiring the interests;
(e) the following information about any interests to which paragraph ( 1)(b) applies:
(i) the number of the interests;
(ii) the amount paid, after the time of acquisition but not after the * ESS deferred taxing point, towards acquiring the interests;
(iii) the provider's estimate of the market value of the interests at the ESS deferred taxing point;
(iv) the amount of TFN withholding tax (ESS) paid or payable by the provider in respect of the interests during the year.
Note: Regulations made for the purposes of section 83A - 315 of the Income Tax Assessment Act 1997 may substitute different amounts for the market values of the ESS interests: see section 392 - 15 in this Schedule.
(4) Subsection ( 3) does not limit the information that the * approved form may require the statement to contain.
When statements must be given
(5) The statement must be given:
(a) to the individual no later than 14 July after the end of the year; and
(b) to the Commissioner no later than 14 August after the end of the year.
Note: Section 388 - 55 allows the Commissioner to defer the time for giving an approved form.
Disregard 30 day rule for ESS deferred taxing point if provider does not know when shares are disposed of etc.
(6) For the purposes of Subdivision 14 - C (about TFN withholding tax (ESS)) and this Division, in working out the * ESS deferred taxing point for an * ESS interest, disregard subsection 83A - 115(3) or 83A - 120(3) (whichever is applicable) of the Income Tax Assessment Act 1997 (about the 30 day rule) if the provider does not know the time worked out under that subsection at the earlier of:
(a) the time (if any) the provider gives a statement to the relevant individual under this section for the * financial year mentioned in subsection ( 7); and
(b) the later of:
(i) 14 July after the end of the financial year mentioned in subsection ( 7); and
(ii) if, under section 388 - 55, the Commissioner defers to a later time the time within which the statement under this section for that financial year is required to be given to the individual--that later time.
(7) The * financial year is the financial year in which the * ESS deferred taxing point for the * ESS interest occurs, disregarding subsection 83A - 115(3) or 83A - 120(3) (whichever is applicable) of the Income Tax Assessment Act 1997 (about the 30 day rule).
392 - 10 Change or omission in information given to the Commissioner
(1) If the provider becomes aware of a material change or material omission in any information given to the individual or the Commissioner under this Division, the provider must:
(a) tell the individual or the Commissioner, as applicable, of the change in the * approved form; or
(b) give the omitted information to the individual or the Commissioner, as applicable, in the approved form.
(2) Information required by subsection ( 1) must be given no later than 30 days after the provider becomes aware of the change or omission.
Note 1: Section 388 - 55 allows the Commissioner to defer the time for giving an approved form.
Note 2: Section 286 - 75 provides an administrative penalty for breach of this section.
Subdivision 392 - B -- Miscellaneous
Table of sections
392 - 15 Application of certain provisions of Division 83A of the Income Tax Assessment Act 1997
392 - 15 Application of certain provisions of Division 83A of the Income Tax Assessment Act 1997
The following provisions of the Income Tax Assessment Act 1997 have effect for the purposes of this Division in the same way as they have for the purposes of Division 83A of that Act:
(a) section 83A - 130 (about takeovers and restructures);
(b) section 83A - 305 (about associates);
(c) section 83A - 315 (about market values and discounts);
(d) section 83A - 320 (about trusts);
(e) section 83A - 325 (about relationships similar to employment);
(f) section 83A - 335 (about stapled securities);
(g) section 83A - 340 (about indeterminate rights).
Part 2 -- Consequential amendments
A New Tax System (Goods and Services Tax) Act 1999
6 Paragraphs 84 - 14(a) and (b)
Repeal the paragraphs, substitute:
(a) the * recipient of the supply is not an entity that has acquired, or may in the future acquire, an ESS interest (within the meaning of the * ITAA 1997) under the scheme; and
(b) Subdivision 83A - B or 83A - C of the ITAA 1997 applies to any ESS interest (within the meaning of that Act) acquired under the scheme; and
7 Section 195 - 1 (definition of employee share scheme )
Omit "section 139C (including as affected by Subdivision DB of Division 13A of Part III) of the * ITAA 1936", substitute "the * ITAA 1997".
Fringe Benefits Tax Assessment Act 1986
8 Subsection 136(1) ( paragraphs ( h) to (hc) of the definition of fringe benefit )
Repeal the paragraphs, substitute:
(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; or
(ha) a benefit constituted by the acquisition of money or property by an employee share trust (within the meaning of the Income Tax Assessment Act 1997 ); or
Income Tax Assessment Act 1936
9 Subsection 6(1) ( paragraph ( n) of the definition of passive income )
Omit "Division 13A", substitute "Division 83A of the Income Tax Assessment Act 1997 (about employee share schemes)".
10 Subsection 6BA(3)
Omit "(other than section 26AAC)".
11 At the end of section 21A
Add:
(7) This section does not apply to an ESS interest (within the meaning of the Income Tax Assessment Act 1997 ) to which Subdivision 83A - B or 83A - C of that Act (about employee share schemes) applies.
12 Subsection 23AF(18) ( paragraph ( a) of the definition of eligible foreign remuneration )
Omit "Division 13A", substitute "Division 83A of the Income Tax Assessment Act 1997 (about employee share schemes)".
13 Subsection 23AF(18) ( paragraph ( b) of the definition of eligible foreign remuneration )
Omit "Division 13A", substitute "that Division".
14 Subsection 23AG(7) (definition of foreign earnings )
Omit "Division 13A", substitute "Division 83A of the Income Tax Assessment Act 1997 (about employee share schemes)".
15 Sections 26AAC and 26AAD
Repeal the sections.
16 Section 109H
Omit "shares, rights or stapled securities", substitute "ESS interests".
17 Section 109NB
Repeal the section, substitute:
109NB Loans to purchase shares under employee share schemes not treated as dividends
A private company is not taken under section 109D to pay a dividend because of a loan made solely for the purpose of enabling the shareholder, or an associate of the shareholder, to acquire an ESS interest under an employee share scheme (within the meaning of the Income Tax Assessment Act 1997 ) to which:
(a) Subdivision 83A - B and subsections 83A - 35(3) to (9) of that Act apply; or
(b) Subdivision 83A - C of that Act applies.
18 Division 13A of Part III
Repeal the Division.
19 Subsection 170(10AA) (after table item 25)
Insert:
30 | Section 83A - 310 | Forfeiture of ESS interests acquired under an employee share scheme |
35 | Section 83A - 340 | Rights that become rights to acquire shares |
20 Section 530A
Repeal the section, substitute:
530A Reduction of foreign investment fund income because of employee share scheme
(1) This section applies if a taxpayer acquires an ESS interest (within the meaning of the Income Tax Assessment Act 1997 ) to which Subdivision 83A - C of that Act (about employee share schemes) applies.
(2) The foreign investment fund income of the taxpayer for a notional accounting period of the FIF, to the extent that the income relates to the interest, is zero if, for the whole of the period, the following conditions are satisfied:
(a) the taxpayer holds the interest;
(b) the interest is an interest in the FIF;
(c) the ESS deferred taxing point (within the meaning of the Income Tax Assessment Act 1997 ) for the interest has not occurred.
(3) The foreign investment fund income of the taxpayer for a notional accounting period of the FIF is to be reduced by an amount equal to any increase in the market value of the interest during a period (if any):
(a) that forms part of the notional accounting period; and
(b) for the whole of which, the following conditions are satisfied:
(i) the taxpayer holds the interest;
(ii) the interest is an interest in the FIF;
(iii) the ESS deferred taxing point (within the meaning of the Income Tax Assessment Act 1997 ) for the interest has not occurred.
(4) Section 83A - 315 of the Income Tax Assessment Act 1997 (about market values of ESS interests) applies to subsection ( 3) of this section in the same way as it applies to Division 83A of that Act.
Income Tax Assessment Act 1997
21 Section 10 - 5 (table item headed "shares")
Repeal:
employee share acquisition schemes .............. | 26AAC, 139 to 139GH |
Substitute:
employee share schemes ..................... | Subdivisions 83A - B and 83A - C |
22 Section 12 - 5 (table item headed "shares")
Repeal:
employee share acquisition schemes, deduction for provider of qualifying shares or rights |
|
Substitute:
employee share schemes, deduction for provider of ESS interests |
|
23 At the end of subsection 15 - 2(3)
Add:
; (e) * ESS interests to which Subdivision 83A - B or 83A - C (about employee share schemes) applies.
24 Paragraph 59 - 40(2)(d)
Repeal the paragraph, substitute:
(d) if you acquired a beneficial interest in the rights under an * employee share scheme--neither Subdivision 83A - B nor 83A - C (about employee share schemes) applies to the beneficial interest;
25 Paragraph 82 - 135(m)
Omit "Division 13A of Part III of the Income Tax Assessment Act 1936 ", substitute "Division 83A of this Act".
26 Subsections 104 - 60(5) and 104 - 75(4) and (6) (notes)
Omit "section 130 - 90", substitute "section 130 - 80".
27 Subsections 104 - 145(7) and (8)
Repeal the subsections, substitute:
(7) You cannot choose to make a * capital loss for a * share, or a right to acquire a beneficial interest in a share, if:
(a) you acquired the beneficial interest (the ESS interest ) in the share or right under an * employee share scheme; and
(b) subsequent to an amount being included in your assessable income under Division 83A (about employee share schemes) in relation to the ESS interest, section 83A - 310 (about forfeiture) applies in relation to ESS interest.
28 Subsection 104 - 160(6)
Repeal the subsection.
29 Section 109 - 55 (table item 12)
Repeal the item.
30 Section 109 - 60 (after table item 11)
Insert:
11A | You acquire an * ESS interest and Subdivision 83A - C (about employee share schemes) applies to the interest | at the * ESS deferred taxing point for the interest | section 83A - 125 |
31 Subsection 112 - 20(3) (note)
After "Note", insert "(1)".
32 At the end of subsection 112 - 20(3)
Add:
Note 2: This section does not apply to ESS interests acquired under employee share schemes: see subsection 130 - 80(4).
33 Section 112 - 75
Repeal the section.
34 Section 112 - 97 (at the end of the table)
Add:
32 | You acquire an * ESS interest and Subdivision 83A - B or 83A - C (about employee share schemes) applies to the interest | First element of cost base and reduced cost base | sections 83A - 30 and 83A - 125 |
35 Subsection 115 - 30(1) (table item 8)
Repeal the item.
36 Subsections 115 - 30(1A) and (1B)
Repeal the subsections.
37 At the end of section 116 - 30
Add:
Note: This section does not apply to ESS interests acquired under employee share schemes: see subsection 130 - 80(4).
38 Subsections 125 - 75(2) and (3)
Repeal the subsections, substitute:
(2) An * ownership interest, in a company, that is owned by an entity is disregarded under subsection ( 1) if:
(a) the entity acquired a beneficial interest in the ownership interest under an * employee share scheme; and
(b) either Subdivision 83A - B and subsections 83A - 35(3) to (9), or Subdivision 83A - C, applies to the beneficial interest; and
(c) the ownership interest is not a fully - paid ordinary * share.
(3) An * ownership interest, in a trust, that is owned by an entity is disregarded under subsection ( 1) if:
(a) both of the following would apply if Division 83A (about employee share schemes) applied to ownership interests in trusts in the same way as it applies to * shares:
(i) the entity acquired a beneficial interest in the ownership interest under an * employee share scheme;
(ii) either Subdivision 83A - B and subsections 83A - 35(3) to (9), or Subdivision 83A - C, applies to the beneficial interest; and
(b) the ownership interest is not a fully - paid unit.
39 Subsection 130 - 40(1) (note)
Repeal the note, substitute:
Note: For rights acquired under employee share schemes, see Division 83A, Subdivision 130 - D and Division 134.
40 Subdivision 130 - D
Repeal the Subdivision, substitute:
Subdivision 130 - D -- Employee share schemes
Table of sections
130 - 75 Objects of Subdivision
130 - 80 ESS interests acquired under employee share schemes
130 - 85 Interests in employee share trusts
130 - 90 Shares held by employee share trusts
130 - 95 Shares and rights in relation to ESS interests
130 - 100 Application of certain provisions of Division 83A
130 - 75 Objects of Subdivision
The objects of this Subdivision are:
(a) to recognise that:
(i) Division 83A contains the primary rules for taxing gains on * ESS interests acquired under * employee share schemes; and
(ii) * capital gains and * capital losses on such interests should usually be disregarded during the period in which Division 83A applies to them; and
(b) to align the treatment of ESS interests under Division 83A and the CGT provisions by, for example:
(i) turning off certain special CGT rules; and
(ii) extending some of the deeming provisions of that Division into the CGT provisions; and
(c) to disregard * employee share trusts for most CGT purposes, by treating ESS interests owned by such trusts as being directly owned by the beneficiaries of the trusts.
130 - 80 ESS interests acquired under employee share schemes
Capital gains and losses
(1) Disregard any * capital gain or * capital loss to the extent that it results from a * CGT event if:
(a) the CGT event happens in relation to an * ESS interest you * acquire under an * employee share scheme; and
(b) the CGT event is not CGT event E4, G1 or K8; and
(c) if Subdivision 83A - B applies to the interest--the time of the acquisition is the time when the CGT event happens; and
(d) if Subdivision 83A - C applies to the interest:
(i) the time of the acquisition is the time when the CGT event happens; or
(ii) the CGT event happens on or before the * ESS deferred taxing point for the ESS interest.
(2) Subsection ( 1) does not apply if:
(a) Subdivision 83A - C applies to the * ESS interest; and
(b) the * CGT event happens because you forfeit or lose the ESS interest (other than by disposing of it) on or before the * ESS deferred taxing point for the interest.
General acquisition rule
(3) Subsection 109 - 5(2) (about when you acquire a CGT asset) does not apply to a * CGT asset and a * CGT event if:
(a) the CGT asset is:
(i) a * share; or
(ii) a right to acquire a beneficial interest in a share; and
(b) the CGT event is CGT event A1; and
(c) you acquire an * ESS interest; and
(d) the ESS interest is a beneficial interest in the share or right; and
(e) Subdivision 83A - B or 83A - C (about employee share schemes) applies to the ESS interest.
Market value substitution rule
(4) Sections 112 - 20 and 116 - 30 (about the market value substitution rule) do not apply to the extent that they relate to:
(a) you acquiring an * ESS interest to which Subdivision 83A - C (about employee share schemes) applies; or
(b) you:
(i) forfeiting an ESS interest; or
(ii) forfeiting or losing an ESS interest that is a beneficial interest in a right (without you having disposed of the interest or exercised the right);
if Subdivision 83A - B or 83A - C applies to the ESS interest (ignoring section 83A - 310).
130 - 85 Interests in employee share trusts
Scope
(1) This section applies if:
(a) you * acquire an * ESS interest under an * employee share scheme; and
(b) Subdivision 83A - B or 83A - C applies to the ESS interest; and
(c) the ESS interest is, or arises because of, an interest you hold in an * employee share trust.
Application of Division 83A, Part 3 - 1 and this Part
(2) Division 83A (Employee share schemes), Part 3 - 1 (Capital gains and losses: general topics) and this Part apply as if you were absolutely entitled to the relevant * share or right:
(a) from the time of acquisition of the * ESS interest; and
(b) until you no longer have an ESS interest in the share or right.
Note 1: An interest you hold in an employee share trust may give rise to an ESS interest because of the operation of section 83A - 320.
Note 2: As a result of subsection ( 2) of this section, CGT event E5 might happen at the time of acquisition. This may result in the trustee making a capital gain. However, any capital gain made by the beneficiary would be disregarded under section 130 - 80.
(3) However, if this section applies to you because an * associate of yours * acquired the * ESS interest, Division 83A, this Part and Part 3 - 3 apply as if your associate were absolutely entitled to the relevant * share or right (instead of you):
(a) either:
(i) if Subdivision 83A - B applies to the ESS interest--from the time of acquisition; or
(ii) if Subdivision 83A - C applies to the ESS interest--from immediately after the * ESS deferred taxing point for the ESS interest; and
(b) until your associate no longer has an ESS interest in the share or right.
Note: Once the ESS interest has been taxed to you under Subdivision 83A - B or 83A - C, section 83A - 305 (which treats the interest as having been acquired by you, rather than your associate) is no longer relevant. Subsection ( 3) of this section ensures that your associate then gets the same tax treatment as you would have, had you originally acquired the interest. This does not, however, imply a disposal from you to your associate.
Meaning of employee share trust
(4) An employee share trust , for an * employee share scheme, is 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).
130 - 90 Shares held by employee share trusts
(1) Disregard any * capital gain or * capital loss made by an * employee share trust, or a beneficiary of the trust, to the extent that it results from a * CGT event, if:
(a) the CGT event is CGT event E5 or E7; and
(b) the CGT event happens in relation to a * share; and
(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 (about employee share schemes) applied.
(2) Subsection ( 1) does not apply if the beneficiary acquired the beneficial interest in the * share for more than its * cost base in the hands of the * employee share trust at the time the * CGT event happens.
130 - 95 Shares and rights in relation to ESS interests
For the purposes of Part 3 - 1 (Capital gains and losses: general topics) and this Part, treat a * CGT event that happens in relation to a * share or right in the same way as a CGT event that happens in relation to an * ESS interest, if:
(a) Subdivision 83A - B or 83A - C (about employee share schemes) applies to the ESS interest; and
(b) the ESS interest forms part of the share or right.
130 - 100 Application of certain provisions of Division 83A
The following provisions have effect for the purposes of this Subdivision in the same way as they have for the purposes of Division 83A:
(a) section 83A - 130 (about takeovers and restructures);
(b) section 83A - 305 (about associates);
(c) section 83A - 320 (about trusts);
(d) section 83A - 325 (about relationships similar to employment);
(e) section 83A - 335 (about stapled securities);
(f) section 83A - 340 (about indeterminate rights).
Repeal the note, substitute:
Note 3: Item 1 in the table is modified for ESS interests acquired under employee share schemes: see Division 83A and section 112 - 97.
Note 4: This Division has no operation in relation to an option acquired under an employee share scheme if the option is exercised before the ESS deferred taxing point for the option: see Subdivision 130 - D. Division 83A applies instead.
42 Section 208 - 190
After "hold shares", insert "acquired".
43 Sections 208 - 205 to 208 - 215
Repeal the sections, substitute:
208 - 205 Distributions to employees acquiring shares under eligible employee share schemes
Division 207 also applies to a * franked distribution made by an * exempting entity if:
(a) the distribution is made to an individual who, at the time the distribution is made, is an employee of:
(i) the exempting entity; or
(ii) a * subsidiary of the exempting entity; and
(b) the employee acquired a beneficial interest in the * share on which the distribution is made:
(i) under an * employee share scheme; and
(ii) in circumstances specified as relevant in section 208 - 215; and
(c) the employee does not hold that beneficial interest as a trustee.
208 - 215 Eligible employee share schemes
(1) An individual acquires a beneficial interest in a * share in a company under an * employee share scheme in circumstances that are relevant for the purposes of paragraphs 208 - 205(b) and 208 - 235(b) if:
(a) all the * ESS interests available for acquisition under the scheme relate to:
(i) ordinary shares; or
(ii) preference shares to which are attached substantially the same rights as are attached to ordinary shares; and
(b) immediately after the individual acquires the interest:
(i) he or she does not hold a beneficial interest in more than 5% of the shares in the company; and
(ii) he or she is not in a position to control, or to control the casting of, more than 5% of the maximum number of votes that might be cast at a general meeting of the company; and
(c) the share is not a * non - equity share.
(2) An individual also acquires a beneficial interest in a * share in a company under an * employee share scheme in circumstances that are relevant for the purposes of paragraphs 208 - 205(b) and 208 - 235(b) if:
(a) the share is part of a stapled security; and
(b) Subdivision 83A - B or 83A - C (about employee share schemes) applies to the beneficial interest in the stapled security.
44 Section 208 - 235
Repeal the section, substitute:
208 - 235 Distributions to employees acquiring shares under eligible employee share schemes
Division 207 also applies to a * distribution * franked with an exempting credit made by a * former exempting entity as if it were a * franked distribution if:
(a) the distribution is made to an individual who, at the time the distribution is made, is an employee of:
(i) the former exempting entity; or
(ii) a * subsidiary of the former exempting entity; and
(b) the employee acquired a beneficial interest in the * share on which the distribution is made:
(i) under an * employee share scheme; and
(ii) in circumstances specified as relevant in section 208 - 215; and
(c) the employee does not hold that beneficial interest as a trustee.
45 Paragraph 208 - 240(b)
Omit "natural persons", substitute "individuals".
46 Paragraphs 208 - 240(c) and (d)
Omit "persons mentioned in paragraph ( b)", substitute "individuals".
47 Paragraph 208 - 240(e)
Omit "a person", substitute "an individual".
48 Paragraph 208 - 240(f)
Omit "the person" (first occurring), substitute "the individual mentioned in paragraph ( e)".
49 Paragraph 208 - 240(f)
Omit "the person mentioned in paragraph ( b)", substitute "that individual".
50 Paragraph 208 - 240(g)
Omit "the person", substitute "the individual".
51 Subsection 247 - 15(3)
Repeal the subsection, substitute:
(3) This Division does not apply to a * capital protected borrowing if:
(a) an * ESS interest is acquired under the borrowing; and
(b) Subdivision 83A - B or 83A - C (about employee share schemes) applies to the ESS interest.
52 Paragraph 703 - 35(4)(b)
Omit " subsection ( 7)", substitute " subsection ( 5)".
53 Subsections 703 - 35(5), (6) and (7)
Repeal the subsections, substitute:
(5) A * share or * membership interest in a company may be disregarded under subsection ( 4) if:
(a) the entity who holds the beneficial interest in the share or membership interest acquired that beneficial interest:
(i) under an * employee share scheme; or
(ii) by exercising a right, a beneficial interest in which was acquired under an employee share scheme; and
(b) paragraphs 83A - 105(1)(a) and (b) and subsection 83A - 105(2) apply to the beneficial interest acquired under the scheme; and
(c) in the case of a membership interest--the interest is part of a stapled security.
54 Paragraph 707 - 325(5)(b)
Repeal the paragraph, substitute:
(b) in association with the acquisition of a * share in a company in relation to which the conditions in subsection 703 - 35(5) are met; or
55 Subsection 707 - 325(5) (note 1)
Omit "and section 139CD of the Income Tax Assessment Act 1936 deal", substitute "deals".
56 Subsection 709 - 80(1) (n ote 1)
Omit "held", substitute "acquired".
57 Subsection 713 - 140(5) (table item 3)
Repeal the item, substitute:
3 | Division 83A | The Division does not apply in relation to an * ESS interest acquired under an * employee share scheme before the day specified in the choice if the Division did not apply in relation to the interest before that day. |
58 Subsections 719 - 30(3), (4) and (5)
Repeal the subsections, substitute:
(3) A * share or * membership interest in a company is covered by this subsection if:
(a) the entity who holds the beneficial interest in the share or membership interest acquired that beneficial interest:
(i) under an * employee share scheme; or
(ii) by exercising a right, a beneficial interest in which was acquired under an employee share scheme; and
(b) paragraphs 83A - 105(1)(a) and (b) and subsection 83A - 105(2) apply to the beneficial interest acquired under the scheme; and
(c) in the case of a membership interest--the interest is part of a stapled security.
59 Paragraph 768 - 910(3)(c)
Omit "Division 86;", substitute "Division 86.".
60 Paragraph 768 - 910(3)(d)
Repeal the paragraph.
61 Subsections 768 - 910(4), (5) and (6)
Repeal the subsections.
62 Sections 768 - 920 to 768 - 945
Repeal the sections.
63 Subsection 768 - 955(2) (2nd sentence)
Repeal the sentence.
64 Subsection 768 - 955(4)
Repeal the subsection, substitute:
(4) This section does not apply to an * ESS interest if:
(a) Subdivision 83A - C (about employee share schemes) applies to the interest; and
(b) the * ESS deferred taxing point for the interest has not yet occurred.
65 Subsection 855 - 45(4)
Repeal the section, substitute:
(4) This section does not apply to an * ESS interest if:
(a) Subdivision 83 - C (about employee share schemes) applies to the interest; and
(b) the * ESS deferred taxing point for the interest has not yet occurred.
66 At the end of Division 960
Add:
960 - 415 Amounts that depend on market value
To avoid doubt, apply the rules in this Subdivision to the * market value component of any calculation that involves market value.
67 Subsection 995 - 1(1) (definition of cessation time )
Repeal the definition.
68 Subsection 995 - 1(1) (definition of employee share scheme )
Repeal the definition, substitute:
"employee share scheme" has the meaning given by subsection 83A - 10(2).
69 Subsection 995 - 1(1) (definition of employee share trust )
Repeal the definition, substitute:
"employee share trust" has the meaning given by subsection 130 - 85(4).
70 Subsection 995 - 1(1)
Insert:
"ESS deferred taxing point" , for an * ESS interest, has the meaning given by sections 83A - 115 and 83A - 120.
Note 1: ESS is short for employee share scheme.
Note 2: For ESS interests acquired before 1 July 2009, see subsection 83A - 5(4) of the Income Tax (Transitional Provisions) Act 1997 .
71 Subsection 995 - 1(1)
Insert:
"ESS interest" , in a company, has the meaning given by subsection 83A - 10(1).
Note: ESS is short for employee share scheme.
72 Subsection 995 - 1(1) (definition of qualifying right )
Repeal the definition.
73 Subsection 995 - 1(1) (definition of qualifying share )
Repeal the definition.
74 Subsection 995 - 1(1) (definition of subsidiary )
Repeal the definition, substitute:
"subsidiary" : the question whether a company is a subsidiary of another company is to be determined in the same way as the question whether a corporation is a subsidiary of another corporation is determined under the Corporations Act 2001 .
Note: The expression 100% subsidiary has the meaning given by section 975 - 505.
75 Subsection 995 - 1(1)
Insert:
"TFN withholding tax (ESS)" means tax payable in accordance with section 14 - 155 in Schedule 1 to the Taxation Administration Act 1953 .
Note: ESS is short for employee share scheme.
76 Subsection 995 - 1(1)
Insert:
"work and income support withholding payments" means work and income support related withholding payments and benefits, within the meaning given by the Income Tax Assessment Act 1936 .
Income Tax (Transitional Provisions) Act 1997
77 Subdivisions 130 - DA and 130 - D
Repeal the Subdivisions.
Taxation Administration Act 1953
78 Paragraphs 14 - 5(3)(d) and (e) in Schedule 1
Repeal the paragraphs, substitute:
(d) a benefit constituted by the acquisition of an * ESS interest * under an employee share scheme to which Subdivision 83A - B or 83A - C of the Income Tax Assessment Act 1997 applies.
79 Subsection 250 - 10(2) in Schedule 1 (after table item 95)
Insert:
100 | TFN withholding tax (ESS) | 14 - 155 in Schedule 1 |
80 After subsection 286 - 75(2B) in Schedule 1
Insert:
(2BA) You are also liable to an administrative penalty if:
(a) you are required under Division 392 (Employee share scheme reporting) to give a statement to an entity (other than the Commissioner) in the * approved form by a particular day; and
(b) you do not give the statement in the approved form to the entity by that day.
81 Paragraph 286 - 80(2)(a) in Schedule 1
After "(2B)", insert ", (2BA)".
82 Subsection 446 - 5(6) in Schedule 1 (table item 5)
Omit "section 130 - 90", substitute "section 130 - 80".
Part 3 -- Application provisions
Income Tax (Transitional Provisions) Act 1997
83 At the end of Part 2 - 40
Add:
Division 83A -- Employee share schemes
Table of Subdivisions
83A - A Application of Division 83A of the Income Tax Assessment Act 1997
83A - B Application of former provisions of the Income Tax Assessment Act 1936
Subdivision 83A - A -- Application of Division 83A of the Income Tax Assessment Act 1997
Table of sections
83A - 5 Application of Division 83A of the Income Tax Assessment Act 1997
83A - 5 Application of Division 83A of the Income Tax Assessment Act 1997
(1) Division 83A of the Income Tax Assessment Act 1997 applies in relation to an ESS interest if:
(a) the interest was acquired on or after 1 July 2009; and
(b) the relevant share or right (within the meaning of Division 13A of Part III of the Income Tax Assessment Act 1936 , as in force at the time (the pre - Division 83A time ) occurring just before Schedule 1 to the Tax Laws Amendment (2009 Budget Measures No. 2) Act 2009 commenced, ( former Division 13A )) was not acquired (within the meaning of former Division 13A) before 1 July 2009.
(2) Furthermore, Subdivision 83A - C of the Income Tax Assessment Act 1997 (and the rest of Division 83A of that Act, to the extent that it relates to that Subdivision) also applies in relation to an ESS interest if:
(a) all of the following subparagraphs apply:
(i) at the pre - Division 83A time, subsection 139B(3) of the Income Tax Assessment Act 1936 applied in relation to the interest;
(ii) the interest was acquired (within the meaning of former Division 13A) before 1 July 2009;
(iii) the cessation time mentioned in subsection 139B(3) of the Income Tax Assessment Act 1936 , as in force at the pre - Division 83A time, for the interest did not occur before 1 July 2009; or
(b) all of the following subparagraphs apply:
(i) at the pre - Division 83A time, section 26AAC of the Income Tax Assessment Act 1936 , as in force at that time, ( former section 26AAC ) applied in relation to the interest;
(ii) the interest was acquired (within the meaning of former section 26AAC) before 1 July 2009;
(iii) an amount has not been included in a person's assessable income under former section 26AAC in relation to the interest before 1 July 2009.
(3) Subsection ( 2) applies despite section 83A - 105 of the Income Tax Assessment Act 1997 .
(4) If Subdivision 83A - C of the Income Tax Assessment Act 1997 applies in relation to an ESS interest because of subsection ( 2):
(a) do not include an amount in your assessable income under subsection 83A - 110(1) of that Act in relation to the ESS interest to the extent that the amount relates to your employment outside Australia; and
(b) subject to subsection 83A - 115(3) or 83A - 120(3) of that Act, whichever is applicable, treat the ESS deferred taxing point for the interest as being:
(i) if paragraph ( 2)(a) of this section applies--the cessation time mentioned in subparagraph ( 2)(a)(iii); or
(ii) if paragraph ( 2)(b) applies--the earliest time at which an amount is included in a person's assessable income under former section 26AAC in relation to the interest; and
(c) treat the reference in subsection 83A - 115(3) or 83A - 120(3) (30 day rule for ESS deferred taxing point), whichever is applicable, of that Act to the time worked out under subsection 83A - 115(2) or 83A - 120(2) of that Act as being a reference to the time worked out under paragraph ( b) of this subsection; and
(d) treat the requirements in paragraphs 83A - 310(a), (b) and (c) of that Act as being satisfied in relation to the interest if, and only if:
(i) if paragraph ( 2)(a) applies--the 2 requirements mentioned in section 139DD of the Income Tax Assessment Act 1936 (as in force at the pre - Division 83A time) are satisfied in relation to the interest; or
(ii) if paragraph ( 2)(b) applies--the requirements in paragraphs ( 8D)(a), (b) and (c) of former section 26AAC are satisfied in relation to the interest; and
(e) Subdivision 14 - C in Schedule 1 to the Taxation Administration Act 1953 (about TFN withholding tax (ESS)) does not apply to the ESS interest; and
(f) if paragraph ( 2)(a) applies:
(i) for the purposes of Division 115 of the Income Tax Assessment Act 1997 (Discount capital gains and trusts' net capital gains), treat the ESS interest as having been acquired by an individual when the individual acquired the legal title in the share or right of which the ESS interest forms part; and
(ii) for the purposes of Division 392 in Schedule 1 to the Taxation Administration Act 1953 (Statements), disregard any election made under former section 139E of the Income Tax Assessment Act 1936 ; and
(g) if paragraph ( 2)(b) applies--paragraph 82 - 135(m) of the Income Tax Assessment Act 1997 does not apply in relation to the ESS interest.
Subdivision 83A - B -- Application of former provisions of the Income Tax Assessment Act 1936
Table of sections
83A - 10 Savings--continued operation of former provisions
83A - 15 Indeterminate rights
83A - 10 Savings--continued operation of former provisions
(1) This section applies if:
(a) at the time (the pre - Division 83A time ) occurring just before Schedule 1 to the Tax Laws Amendment (2009 Budget Measures No. 2) Act 2009 commenced:
(i) Division 13A of Part III of the Income Tax Assessment Act 1936 , as in force at that time, ( former Division 13A ) applied in relation to a share or right (within the meaning of former Division 13A); or
(ii) section 26AAC of that Act , as in force at that time, applied in relation to a share or right (within the meaning of that section as in force at that time); and
(b) if there is a beneficial interest in the share or right that is an ESS interest--Division 83A of the Income Tax Assessment Act 1997 does not apply in relation to the interest under section 83A - 5.
(2) If subparagraph ( 1)(a)(i) applies, to avoid doubt, former Division 13A continues to apply (in spite of its repeal) to the share or right.
(3) If subparagraph ( 1)(a)(ii) applies, to avoid doubt, sections 26AAC and 26AAD of the Income Tax Assessment Act 1936 , as in force at the pre - Division 83A time, continue to apply (in spite of their repeal) to the share or right.
(1) This section applies if:
(a) you acquired a beneficial interest in a right before 1 July 2009; and
(b) on or after 1 July 2009, the right becomes a right to acquire a beneficial interest in a share.
(2) Division 13A of the Income Tax Assessment Act 1936 is taken to have applied as if the right had always been a right to acquire the beneficial interest in the share.
84 At the end of Division 703
Add:
703 - 35 Employee share schemes
Despite the amendments of section 703 - 35 of the Income Tax Assessment Act 1997 made by Schedule 1 to the Tax Laws Amendment (2009 Budget Measures No. 2) Act 2009 , subsection ( 4) of that section continues to apply, from the commencement of that Schedule, to each share and membership interest that it applied to just before that commencement.
85 At the end of Subdivision 719 - B
Add:
719 - 30 Employee share schemes
Despite the amendment of section 719 - 30 of the Income Tax Assessment Act 1997 made by Schedule 1 to the Tax Laws Amendment (2009 Budget Measures No. 2) Act 2009 , subsection ( 2) of that section continues to apply, from the commencement of that Schedule, to each share and membership interest that it applied to just before that commencement.
86 Application of other amendments
The amendments made by this Schedule (other than items 1, 83, 84 and 85) apply in relation to the ESS interests mentioned in subsections 83A - 5(1) and (2) of the Income Tax (Transitional Provisions) Act 1997 , as inserted by this Schedule.
87 Transitional--regulations
Despite subsection 12(2) of the Legislative Instruments Act 2003 , regulations that:
(a) are made for the purposes of Division 83A of the Income Tax Assessment Act 1997 , added by this Schedule; or
(b) are made for the purposes of a taxation law (within the meaning of that Act) and relate to the amendments made by this Schedule;
may take effect from any time on or after 1 July 2009, if the regulations are made before the end of the period of 3 months commencing on the day this Schedule commences.