Taxation Laws Amendment Act (No. 2) 1995 (169 of 1995)
Schedule 2 EMPLOYEE SHARE SCHEMES
Part 1 INCOME TAX ASSESSMENT ACT 1936
Division 1 Insertion of Division 13A in Part III
1 After Division 13 of Part III
Insert:
"Division 13A-Employee share schemes
"Subdivision A-Key principle and overview of Division
The key principle
"139.
This Division provides for the taxation treatment of shares and rights
acquired under employee share schemes.
Any discount from the market price of the shares or rights is
assessable. However, 2 alternative concessions are available for
shares or rights provided under schemes that satisfy certain
requirements.
The first concession is that the discount will not be included in the
employee's assessable income until a later year of income.
The second concession is that the employee may make an election that
reduces the amount assessed. Additional requirements must be satisfied
to obtain this concession.
Overview of Division
"139A. The following table summarises the contents of this Division:
OVERVIEW
Subdivision Coverage
A Key principle and overview
B The basic requirement that the discount be included in
assessable income
C Key concepts: employee share scheme, discount,
cessation time, qualifying shares, qualifying rights
and exemption conditions
D Special provisions
E Elections
F Special provisions about the market value of a share or
right
G Definitions (including a list of all terms defined in
the Division)
"Subdivision B-Inclusion of discount in assessable income
Discount to be included in assessable income
"139B.(1) If a taxpayer has acquired a share or right under an
employee share scheme, the assessable income of the taxpayer includes
the discount given in relation to the share or right.
Note: Employee share scheme is defined in section 139C.
When the discount is to be included
"(2) Unless subsection (3) applies, the discount is included in the
taxpayer's assessable income of the year of income in which the share
or right is acquired.
"(3) If the share or right is a qualifying share or right and the
taxpayer has not made an election under section 139E for the year of
income in which the share or right is acquired, the discount is
included in the taxpayer's assessable income of the year of income in
which the cessation time (see sections 139CA and 139CB) occurs.
Reduction of amounts included-elections
"139BA.(1) This section applies if a taxpayer has made an election
under section 139E for a year of income and the exemption conditions
(see section 139CE) are satisfied in relation to shares or rights
covered by the election. It applies to the total amount otherwise
included in a taxpayer's assessable income for the year of income
under section 139B in respect of those shares or rights.
"(2) The total amount is only included in the assessable income to
the extent that it is greater than $500.
"Subdivision C-Key concepts: employee share scheme, discount,
cessation time, qualifying shares and rights and
exemption conditions
Employee share schemes
"139C.(1) A taxpayer acquires a share or right under an employee
share scheme if the share or right is acquired by the taxpayer in
respect of, or for or in relation directly or indirectly to, any
employment of the taxpayer or an associate of the taxpayer.
"(2) A taxpayer acquires a share or right under an employee share
scheme if the share or right is acquired by the taxpayer in respect
of, or for or in relation directly or indirectly to, any services
provided by the taxpayer or an associate of the taxpayer.
"(3) The taxpayer does not acquire a share or right under an
employee share scheme if the consideration for the acquisition is
equal to, or more than, the market value of the share or right at the
time that it is acquired.
"(4) The taxpayer does not acquire a share under an employee share
scheme if the taxpayer acquires the share as the result of exercising
a right that the taxpayer acquired under an employee share scheme.
"(5) The taxpayer does not acquire a share or right under an
employee share scheme if the taxpayer is a trust whose sole activities
are obtaining shares, or rights to acquire shares, and providing those
shares or rights to employees of a company or to associates of those
employees.
Cessation time-shares
"139CA.(1) The cessation time for a share is the time when the
taxpayer acquires the share if:
(a) there is no restriction preventing the taxpayer from disposing
of the share before a particular time; and
(b) the scheme under which the share was acquired did not have any
conditions that could result in the taxpayer forfeiting ownership of
the share.
"(2) If subsection (1) does not apply, the cessation time for a
share is the earliest of the following:
(a) the time when the taxpayer disposes of the share;
(b) the later of:
(i) the time when any restriction preventing the taxpayer from
disposing of the share ceases to have effect; and
(ii) the time when any condition that could result in the taxpayer
forfeiting ownership of shares ceases to have effect;
(c) the time when the employment in respect of which the share was
acquired ceases;
(d) the end of the 10 year period starting when the taxpayer
acquired the share.
"(3) For the purposes of subsection (2), a taxpayer only ceases the
employment in respect of which the share was acquired when the
taxpayer is no longer employed by any of the following:
(a) the employer of the taxpayer in that employment;
(b) a holding company of the employer;
(c) a subsidiary of the employer or of a holding company of the
employer.
Cessation time-rights
"139CB.(1) The cessation time for a right is the earliest of the
following:
(a) the time when the taxpayer disposes of the right (other than by
exercising it);
(b) the time when the employment in respect of which the right was
acquired ceases;
(c) if the right is exercised and there is a restriction preventing
the taxpayer from disposing of the share acquired as a result of the
exercise of the right or a condition that could result in the taxpayer
forfeiting ownership of the share-the time when the last such
restriction or condition ceases to have effect;
(d) if the right is exercised and there is no such restriction or
condition-the time when the right is exercised;
(e) the end of the 10 year period starting when the taxpayer
acquired the right.
"(2) For the purposes of subsection (1), a taxpayer only ceases the
employment in respect of which the right was acquired when the
taxpayer is no longer employed by any of the following:
(a) the employer of the taxpayer in that employment;
(b) a holding company of the employer;
(c) a subsidiary of the employer or of a holding company of the
employer.
Calculation of discount
"139CC.(1) This section sets out how to calculate the discount given
in relation to a share or right.
Case 1-discount covered by subsection 139B(2)
"(2) If subsection 139B(2) applies to the discount, the discount is
the market value of the share or right at the time when it was
acquired by the taxpayer less any consideration paid or given by the
taxpayer as consideration for the acquisition of the share or right.
Case 2-discount covered by subsection 139B(3)-share or right disposed
of at arm's length within 30 days
"(3) If subsection 139B(3) applies to the discount, and the share or
right (or any share acquired as a result of the exercise of the right)
is disposed of by the taxpayer in an arm's length transaction at the
cessation time or within 30 days after the cessation time, the
discount is:
(a) the amount or value of any consideration received by the
taxpayer for the disposal;
reduced by:
(b) the amount or value of any consideration paid or given by the
taxpayer as consideration for the acquisition of the share or right;
and
(c) for a right that has been exercised-the amount or value of any
consideration paid or given to exercise the right.
Case 3-discount covered by subsection 139B(3)-share or right not
disposed of at arm's length within 30 days
"(4) If subsection 139B(3) applies to the discount, and the share or
right (or any share acquired as a result of the exercise of the right)
is not disposed of by the taxpayer in an arm's length transaction at
the cessation time or within 30 days after the cessation time, the
discount is:
(a) the market value of the share or right (or the share acquired as
a result of the exercise of the right) at the cessation time;
reduced by:
(b) the amount of any consideration paid or given by the taxpayer as
consideration for the acquisition of the share or right; and
(c) for a right that has been exercised-the amount of any
consideration paid or given by the taxpayer to exercise the right.
Meaning of qualifying shares and qualifying rights
"139CD.(1) For the purposes of this Division:
(a) a share in a company is a qualifying share if the 6 conditions
below are satisfied; and
(b) a right to acquire a share in a company is a qualifying right if
the first, second, third, fifth and sixth of the 6 conditions below
are satisfied.
Note: Section 139DF excludes certain shares from being qualifying
shares.
"(2) The first condition is that the share or right is acquired by a
taxpayer under an employee share scheme.
"(3) The second condition is that the company is the employer of the
taxpayer or a holding company of the employer of the taxpayer.
"(4) The third condition is that all the shares available for
acquisition under the scheme are ordinary shares and all the rights
available for acquisition under the scheme are rights to acquire
ordinary shares.
"(5) The fourth condition is that, at the time the share was
acquired, at least 75% of the employees of the employer were, or at
some earlier time had been, entitled to acquire:
(a) shares or rights under the scheme; or
(b) shares or rights in the employer, or a holding company of the
employer, under another employee share scheme.
"(6) The fifth condition is that, immediately after the acquisition
of the share or right, the taxpayer does not hold a legal or
beneficial interest in more than 5% of the shares in the company.
"(7) The sixth condition is that, immediately after the acquisition
of the share or right, the taxpayer is not in a position to cast, or
control the casting of, more than 5% of the maximum number of votes
that might be cast at a general meeting of the company.
"(8) The Commissioner may determine that the fourth condition (see
subsection (5)) is taken to have been satisfied in relation to a share
or a right if the Commissioner considers that the employer has done
everything reasonably practicable to ensure that the condition was
satisfied.
Exemption conditions
"139CE.(1) This section sets out the 3 exemption conditions that
must be satisfied for section 139BA to apply to a share or right
acquired under an employee share scheme.
"(2) The first condition is that the scheme did not have any
conditions that could result in any recipient forfeiting ownership of
shares or rights acquired under it.
"(3) The second condition is that the scheme was operated so that no
recipient would be permitted to dispose of a share or right (the
scheme share or scheme right) acquired under it, or of a share
acquired as a result of a scheme right, before the earlier of the
following times:
(a) the end of the period of 3 years after the time of the
acquisition of the scheme share or scheme right;
(b) the time when the taxpayer ceased, or first ceased, to be
employed by the employer.
"(4) The third condition is that both the employee share scheme and
any scheme for the provision of financial assistance in respect of
acquisitions of shares or rights under the employee share scheme are
operated on a non-discriminatory basis (see section 139GE).
"(5) For the purposes of subsection (3), a taxpayer only ceases the
employment in respect of which the share or right was acquired when
the taxpayer is no longer employed by any of the following:
(a) the employer of the taxpayer in that employment;
(b) a holding company of the employer;
(c) a subsidiary of the employer or of a holding company of the
employer.
"Subdivision D-Special provisions
Discount assessable to associate if share acquired by taxpayer in
respect of associate's employment
"139D.(1) This section applies if:
(a) a taxpayer has acquired a share or right under an employee share
scheme; and
(b) the share or right was acquired by the taxpayer in respect of,
or for or in relation directly or indirectly to, any employment of, or
services rendered by, an associate of the taxpayer; and
(c) apart from this section, an amount would be included in respect
of the acquisition in the assessable income of the taxpayer of a year
of income under this Division.
"(2) If this section applies, the amount is included in the
associate's assessable income of the year of income instead of in the
taxpayer's assessable income.
Acquisition of legal interest in shares or rights- certain discounts
not assessable
"139DA. If:
(a) a taxpayer has acquired the legal interest in a share or right;
and
(b) the taxpayer, or an associate of the taxpayer, is required to
include an amount under section 139B in the taxpayer's or the
associate's assessable income as a result of the acquisition; and
(c) the taxpayer, or the associate, is, or would apart from section
139BA be, required to include an amount under section 139B in his or
her assessable income as a result of the acquisition of the beneficial
interest in the share or right;
the taxpayer, or the associate, is not required to include the amount
mentioned in paragraph (b).
No deduction until share or right acquired
"139DB. If, at a particular time, a person (the provider) provides
another person with money or other property:
(a) under an arrangement; and
(b) for the purpose of enabling another person (the ultimate
beneficiary) to acquire, directly or indirectly, a share or right,
under an employee share scheme;
then, for the purpose of determining when any deduction is allowable
to the provider in respect of provision of the money or other
property, the provider is taken to have provided it not before the
time when the ultimate beneficiary acquires the share or right.
Note: The amount included in assessable income for the acquisition
of an interest in a share is the same as for the acquisition of the
share-see Subdivision F and section 139G.
Deduction for provider of certain qualifying shares or rights
"139DC.(1) A taxpayer is entitled to an allowable deduction in the
taxpayer's assessment in respect of income of a year of income (the
benefit year) if the taxpayer provides one or more qualifying shares
or qualifying rights to another person in the benefit year that
satisfy the following conditions:
(a) the exemption conditions (see section 139CE);
(b) the condition that no amount has been allowed, is allowable, or
will be allowable, as a deduction in the assessment of the taxpayer in
respect of income of any year of income in respect of expenditure
incurred in providing the share or right.
"(2) The amount of the deduction in respect of the shares or rights
provided by the taxpayer to the person in the benefit year is the
lesser of:
(a) $500; and
(b) the sum of the market values, at the time that the share or
right is provided, of each qualifying share or qualifying right that
satisfies the conditions in subsection (1) reduced by the sum of any
amounts paid by the person as consideration for those shares or
rights.
Note: Only one deduction is allowable under this section in
respect of each person to whom the taxpayer provided shares or rights
in a year.
No benefit where rights lost
"139DD.(1) For the purposes of this Division, a right to acquire a
share in a company is never acquired by a taxpayer if the following 2
requirements are satisfied.
"(2) The first requirement is that the taxpayer loses the right
without having exercised it.
"(3) The second requirement is that the company is the employer of
the taxpayer or a holding company of the employer of the taxpayer.
"(4) Section 170 does not prevent the amendment of an assessment at
any time for the purpose of giving effect to this section.
Amount not assessable under section 21A or paragraph 26(e)
"139DE. Section 21A and paragraph 26(e) do not apply to:
(a) a share or right that a taxpayer acquires under an employee
share scheme; or
(b) any share acquired by a taxpayer as a result of a right covered
by paragraph (a).
Anti-avoidance-certain shares and rights not qualifying shares and
qualifying rights
"139DF.(1) Despite any other provision of this Part, a share in a
company, or a right to acquire a share in a company, acquired by a
taxpayer is not a qualifying share or right if:
(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) the taxpayer is employed by the company and is also employed by
another company; and
(c) the company and the other company are members of the same
company group.
"(2) A company is a member of the same company group as another
company if one of the companies is a holding company of the other or
if another company is a holding company of both companies.
"Subdivision E-Elections
Taxpayer may make election
"139E.(1) A taxpayer may make an election under this section that
subsection 139B(2) applies for a year of income. The election covers
each qualifying share or qualifying right acquired in that year by the
taxpayer.
How and when election must be made
"(2) The election must be in writing in a form approved by the
Commissioner and be made before the taxpayer lodges his or her return
of income for the year of income, or within such further time as the
Commissioner allows.
"Subdivision F-Special provisions about the market value
of a share or right
Meaning of market value of a share or right
"139F. This Subdivision sets out how to determine the market value
of a share or right to acquire a share on a particular day.
Listed shares or rights-market value
"139FA. If the share or right is quoted on a stock market of an
approved stock exchange on that day, the market value is:
(a) if there was at least one transaction on that stock market in
shares or rights of that class during the one week period before that
day-the weighted average of the prices at which those shares or rights
were traded on that stock market during the one week period before
that day; or
(b) if there were no transactions on that stock market in that one
week period in such shares or rights-the last price at which an offer
was made on that stock market in that period to buy such a share or
right.
Unlisted shares-market value
"139FB.(1) If the share is not quoted on an approved stock exchange
on that day, the market value is the arm's length value of the share:
(a) as specified in a written report, in a form approved by the
Commissioner, given to the person from whom the taxpayer acquires the
share by a person who is a qualified person in relation to valuing the
share (see section 139FG); or
(b) as calculated in accordance with any other method approved in
writing by the Commissioner as a reasonable method of calculating the
arm's length value of unlisted shares.
Partly paid unlisted shares
"(2) Without limiting the factors that must be taken into account in
valuing, under paragraph (1)(a), a share that is partly paid, the
qualified person must take into account:
(a) the amount of the par value of the share that is already paid;
and
(b) the amount and timing of future calls; and
(c) rights to dividends that arise from holding the share.
Unlisted rights-market value
"139FC. If the right is not quoted on an approved stock exchange on
that day, the market value is the greater of:
(a) the market value, on the particular day, of the share that may
be acquired by exercising the right, less the lowest amount that must
be paid to exercise the right to acquire the share; and
whichever of the following applies:
(b) if the right can not be exercised more than 10 years after the
day when the right was acquired-subject to section 139FE, the value
determined in accordance with regulations for the purpose of this
paragraph or, if no such regulations are in force, the value
determined in accordance with sections 139FJ to 139FN;
(c) if the right can be exercised more than 10 years after the day
when the right was acquired-the greater of:
(i) the arm's length value of the right as specified in a written
report, in a form approved by the Commissioner, given to the person
from whom the taxpayer acquires the right by a suitably qualified
valuer; and
(ii) the value that would have been determined under paragraph (b)
if the right could be exercised 10 years after the particular day.
Conditions and restrictions to be disregarded
"139FD. In determining the market value of a share or right under
section 139FB or 139FC, the share or right, and any share that may be
acquired as a consequence of the exercise or operation of the right,
is taken not to be subject to any conditions or restrictions.
Value of right nil or can not be determined
"139FE. If the lowest amount that must be paid to exercise a right
to acquire a share is nil or can not be determined, the market value
of the right on a particular day is the same as the market value of
the share on that day.
Value of legal and beneficial interests
"139FF. To avoid doubt, if a person acquires either the beneficial
interest or the legal interest in a share or right, the value that is
applicable for the purposes of this Division is the value of the share
or right, not the value of the interest in the share or right.
Notes: 1. It is the value of the share or right that is relevant
because the taxpayer is taken to have acquired the share or right-see
section 139G.
2. Double taxation is avoided by section 139DA.
Meaning of qualified person
"139FG. A person is a qualified person in relation to valuing a
share in a company if the person is registered as a company auditor
under a law in force in a State or a Territory, and is not:
(a) a director, secretary or employee of the company; or
(b) a partner, employer or employee of a person referred to in
paragraph (a); or
(c) a partner or employee of an employee of a person so referred to.
Meaning of published price where multiple quotation
"139FH. If a share or right is quoted on a day on 2 or more approved
stock markets, the published price on that day of that share or right
is the published price on whichever of those stock markets is
nominated by the taxpayer.
Provision of information about market value
"139FI. If a taxpayer requests the person from whom he or she
acquired a share or right to provide information necessary for the
taxpayer to calculate the market value of the share or right at a
particular time, the person must take all reasonable steps to provide
that information within 30 days after the request.
Outline of remainder of Subdivision
"139FJ. The remainder of this Subdivision sets out the method of
calculating, for the purposes of paragraph 139FC(b), the market value,
on a particular day, of a right to acquire a share.
Step 1-calculate the calculation percentage
"139FK. Apply the following formula. The result is the calculation
percentage.
[(Market value, on the particular day, of the share that is the subject of the right)/(Amount, or lowest amount, that must be paid to exercise the right)]*(100%)
Step 2-how to use calculation percentage
If calculation percentage is less than 50%
"139FL.(1) If the calculation percentage is less than 50%, the
market value of the right is nil.
If calculation percentage is equal to or greater than 50% but less
than 110%
"(2) If the calculation percentage is equal to, or greater than, 50%
but less than 110%, go to the instructions for using Table 1 in
section 139FM that are set out below that Table.
If calculation percentage is equal to or greater than 110%
"(3) If the calculation percentage is equal to, or greater than,
110%, go to the instructions for using Table 2 in section 139FN that
are set out below that Table.
Table 1 and instructions
Table 1
"139FM.(1) The following is Table 1:
Calculation percentage
Exercise
period 50% to 60% to 70% to 75% to 80% to 85% to 90% to 92.5%
(months) 60% 70% 75% 80% 85% 90% 92.5% to 95%
108 to 120 0.6% 2.1% 4.8% 6.7% 8.9% 11.4% 14.1% 15.5%
96 to 108 0.4% 1.5% 4.0% 5.8% 7.9% 10.3% 13.0% 14.5%
84 to 96 0.2% 1.1% 3.2% 4.8% 6.8% 9.2% 11.8% 13.3%
72 to 84 0.1% 0.7% 2.4% 3.8% 5.6% 7.9% 10.5% 11.9%
60 to 72 0.0% 0.4% 1.6% 2.8% 4.4% 6.5% 9.0% 10.4%
48 to 60 0.0% 0.1% 0.9% 1.8% 3.1% 4.9% 7.3% 8.6%
36 to 48 0.0% 0.0% 0.4% 0.9% 1.9% 3.3% 5.4% 6.6%
24 to 36 0.0% 0.0% 0.1% 0.3% 0.8% 1.8% 3.4% 4.4%
18 to 24 0.0% 0.0% 0.0% 0.1% 0.4% 1.0% 2.3% 3.2%
12 to 18 0.0% 0.0% 0.0% 0.0% 0.1% 0.4% 1.3% 2.0%
9 to 12 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.8% 1.3%
6 to 9 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.3% 0.7%
3 to 6 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2%
0 to 3 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Calculation percentage
Exercise
period 95% to 97.5% to 100% to 102.5% to 105% to 107.5% to
(months) 97.5% 100% 102.5% 105% 107.5% 110%
108 to 120 16.9% 18.4% 20.0% 21.5% 23.1% 24.7%
96 to 108 15.9% 17.5% 19.0% 20.6% 22.2% 23.9%
84 to 96 14.8% 16.3% 17.9% 19.5% 21.2% 22.9%
72 to 84 13.4% 15.0% 16.6% 18.2% 19.9% 21.7%
60 to 72 11.8% 13.4% 15.0% 16.7% 18.5% 20.3%
48 to 60 10.1% 11.6% 13.2% 14.9% 16.7% 18.6%
36 to 48 8.0% 9.5% 11.1% 12.9% 14.7% 16.5%
24 to 36 5.7% 7.1% 8.7% 10.4% 12.2% 14.1%
18 to 24 4.4% 5.7% 7.2% 8.9% 10.8% 12.7%
12 to 18 2.9% 4.1% 5.6% 7.3% 9.1% 11.2%
9 to 12 2.2% 3.3% 4.7% 6.3% 8.2% 10.3%
6 to 9 1.4% 2.3% 3.6% 5.3% 7.2% 9.4%
3 to 6 0.5% 1.2% 2.4% 4.1% 6.1% 8.4%
0 to 3 0.1% 0.4% 1.3% 3.0% 5.3% 7.8%
Instructions for using Table 1
"(2) From Table 1, select the percentage (the Table 1 percentage)
that corresponds to:
(a) the period, in months, from the particular day until the last
day on which the right may be exercised (the exercise period); and
(b) the calculation percentage;
and then multiply the amount, or lowest amount, that must be paid to
exercise the right by the Table 1 percentage. The result is the market
value of the right.
Table 2 and instructions
Table 2
"139FN.(1) The following is Table 2:
Exercise period
(months) Column 1 Column 2
108 to 120 24.7% 0.6%
96 to 108 23.9% 0.6%
84 to 96 22.9% 0.7%
72 to 84 21.7% 0.7%
60 to 72 20.3% 0.7%
48 to 60 18.6% 0.7%
36 to 48 16.5% 0.8%
24 to 36 14.1% 0.8%
18 to 24 12.7% 0.8%
12 to 18 11.2% 0.9%
9 to 12 10.3% 0.9%
6 to 9 9.4% 0.9%
3 to 6 8.4% 0.9%
0 to 3 7.8% 1.0%
Instructions for using Table 2-calculating the base percentage
"(2) From column 1 of Table 2, select the percentage that
corresponds to the period, in months, from the particular day until
the last day on which the right may be exercised. This percentage is
called the base percentage.
Instructions for using Table 2-calculating the additional percentage
"(3) From column 2 of Table 2, select the percentage that
corresponds to the exercise period (the exercise period). This
percentage is called the additional percentage.
Instructions for using Table 2-calculating the excess
"(4) Work out the result of the following formula. Disregard any
fraction. The result is called the excess.
(100) * [(Calculation percentage) - (110%)]
Instructions for using Table 2-calculating the market value
"(5) The market value of the right is the amount worked out using
the following formula:
(Amount or lowest amount that must be paid to exercise the right)*[Base percentage * (Excess * Additional percentage)]
Note: If:
(a) the exercise period; or
(b) the calculation percentage in relation to a particular right;
is the top of one range in Table 1 or 2 and is also the bottom of
another range in that Table, it is taken to be in the lower range and
not in the higher range.
"Subdivision G-Definitions
Meaning of acquiring or providing a share or right
"139G. A person acquires a share or right if:
(a) another person transfers the share or right to that person
(other than, in the case of a share, by issuing the share to that
person); or
(b) in the case of a share-another person allots the share to that
person; or
(c) in the case of a right-another person creates the right in that
person; or
(d) the person otherwise acquires a legal interest in the share or
right from another person; or
(e) the person acquires a beneficial interest in the share or right
from another person.
In those circumstances, the other person provides the share or right.
Meaning of employee and employer
"139GA. The expressions employee and employer have the same meanings
as in section 221A.
Meaning of permanent employee
"139GB.(1) Subject to subsections (2) and (3), permanent employee of
a company is:
(a) a full-time employee of the company; or
(b) a permanent part-time employee of the company;
with at least 36 months service (whether continuous or
non-continuous).
"(2) A person is not a permanent employee of the company at any time
when the person is a director of the company.
"(3) A person is not a permanent employee at any time when the
person:
(a) is an exempt visitor within the meaning of section 517 of the
Income Tax Assessment Act 1936; or
(b) is not a resident within the meaning of that Act; or
(c) is not physically present in Australia.
"(4) For the purposes of subsection (1), the length of a person's
service includes any period when the person is, in accordance with the
terms and conditions of that service:
(a) absent on recreation leave; or
(b) absent from work because of accident or illness.
"(5) In paragraph (4)(a), recreation leave does not include:
(a) long service leave, furlough, extended leave or leave of a
similar kind (however described); or
(b) leave without pay or on reduced pay.
Meaning of holding company
"139GC. The expression holding company has the same meaning as in
the Corporations Law.
Meaning of approved stock exchange
"139GD. A stock exchange is an approved stock exchange if:
(a) the stock exchange is named in regulations made for the purposes
of this section; or
(b) if no such regulations are in force-the stock exchange is an
approved stock exchange within the meaning of Part XI.
Meaning of associate
"139GE. The expression associate has the same meaning as it would
have in section 26AAB if:
(a) the following paragraph were inserted before paragraph (14)(a)
of that section:
"(aa) a company where the taxpayer holds (whether directly or
indirectly through one or more interposed companies, partnerships or
trusts) a share in the company, or a right to acquire a share in the
company;"; and
(b) 'paragraph (a)' wherever occurring in subsection (14) were
omitted and 'paragraph (aa) or (a)' were substituted.
Meaning of conducting a scheme on a non-discriminatory basis
"139GF.(1) This section sets out the conditions that must be
satisfied for the employee share scheme mentioned in subsection
139CE(4) or a scheme for the provision of financial assistance in
respect of acquisitions of shares or rights under the employee share
scheme to be operated on a non-discriminatory basis.
Non-discriminatory employee share scheme
"(2) The employee share scheme is operated on a non-discriminatory
basis if, and only if, the following conditions are satisfied in
relation to all offers to acquire shares or rights under the scheme:
(a) participation in the scheme is open to at least 75% of permanent
employees of the employer;
(b) the time for acceptance of each offer is reasonable;
(c) the essential features of each offer are the same for at least
75% of permanent employees of the employer.
Essential features of offer
"(3) The essential features of an offer for an employee share scheme
are:
(a) the consideration for the acquisition of the share or right
concerned (whether that consideration is determined by reference to
the value of the share or right or otherwise); and
(b) the number of shares or rights, the minimum number of shares or
rights or the maximum number of shares or rights, offered to each
employee, as the case may be; and
(c) the time for acceptance of the offer; and
(d) the steps taken for the circulation of information about the
offer.
Non-discriminatory financial assistance schemes
"(4) The scheme for the provision of financial assistance in respect
of acquisitions of shares or rights under the employee share scheme is
operated on a non-discriminatory basis if, and only if, the following
conditions are satisfied in relation to all financial assistance
provided under the scheme:
(a) the time for taking up each offer of assistance is reasonable;
(b) the essential features of each offer of assistance are the same
for at least 75% of permanent employees of the employer.
Essential features of offer of financial assistance
"(5) The essential features of an offer of financial assistance are:
(a) the terms and conditions of the offer; and
(b) the amount, the minimum amount, or the maximum amount, of
assistance offered to each employee, as the case may be.
"(6) The Commissioner may determine that the condition mentioned in
paragraph (2)(a), (2)(c) or (4)(b) is taken to have been satisfied in
relation to a scheme if the Commissioner considers that the employer
has done everything reasonably practicable to ensure that the
condition was satisfied.
Meaning of provision of financial assistance
"139GG. The expression provision of financial assistance includes
the making of a loan, giving of a guarantee, provision of security,
release of an obligation and forgiving of a debt.
Index of definitions
"139GH. The following table lists the definitions in this Division
and shows their location:
Definition Provision
Acquiring a share or right 139G
Approved stock exchange 139GD
Associate 139GE
Cessation time - rights 139CB
Cessation time - shares 139CA
Discount 139CC
Employee 139GA
Employee share scheme 139C
Employer 139GA
Exemption conditions 139CE
Financial assistance 139GG
Holding company 139GC
Market value of a
share or right Subdivision F
Non-discriminatory schemes 139GF
Permanent employee 139GB
Providing a share or right 139G
Published price 139FH
Qualified person 139FG
Qualifying shares and
qualifying rights 139CD