If you have included a discount on your ESS interests in your assessable income, you may be entitled to exclude the discount and receive a refund of any tax paid in relation to those interests, if the interests are either:
- subsequently forfeited
- in the case of a right, forfeited, lapsed, expired or lost (without the right having been disposed of or exercised).
For ESS interests acquired between 1 July 2009 and 30 June 2015 you are only entitled to a refund if all of the following apply:
- the conditions of the scheme did not have the direct effect of protecting you from a fall in the market value of the interest, and
- you had no choice but to forfeit or lose the ESS interests (except where the choice was to cease employment).
For ESS interest acquired from 1 July 2015 you are only entitled to a refund if all of the following apply:
- the conditions of the scheme did not have the direct effect of protecting you from a fall in the market value of the interest
- the forfeiture or loss was not the result of a choice you made, except where the choice was to either
- cease employment
- if the ESS interest was a right, not to exercise the right before it lapsed or allow the right to be cancelled.
If you are entitled to a refund, you are treated as never having acquired your ESS interests.
You can amend your tax return for the income year the discount was included. There is no time limit for amending a tax return to exclude this amount from your assessable income.
See also
Example: Choice not to exercise rights – no refund (July 2009 to June 2015)
Leigh is granted rights to acquire shares in his employer Welding Ltd under an ESS in the 2010 income year. The scheme is a taxed-upfront scheme – not eligible for reduction.
The rights are exercisable on payment of the exercise price and will lapse if not exercised by 10 May 2012.
Leigh includes the discount in his 2010 income tax return.
In the 2012 financial year, the market value of Welding Ltd shares falls dramatically and by May 2012, it is below the exercise price.
Leigh decides not to exercise the rights and they subsequently lapse.
As Leigh has chosen not to exercise the rights, he is not entitled to exclude the discount he included in his 2010 assessment.
End of example