Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-40 - RULES AFFECTING EMPLOYEES AND OTHER TAXPAYERS RECEIVING PAYG WITHHOLDING PAYMENTS  

Division 83A - Employee share schemes  

Subdivision 83A-C - Deferred inclusion of gain in assessable income  

Main provisions

SECTION 83A-105   Application of Subdivision  

Scope of Subdivision

83A-105(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

(aa) after applying section 83A-315 , there is still a discount given in relation to the interest; and

(ab) section 83A-33 (about start ups) does not reduce the amount to be included in your assessable income in relation to the interest; and

(b) subsections 83A-45(1) , (2) , (3) and (6) 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) or (6) applies to the interest.

Note:

Subsections 83A-45(1) , (2) , (3) and (6) 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

83A-105(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

83A-105(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

83A-105(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.

83A-105(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.

Scheme ' s rules state that this Subdivision applies

83A-105(6)    

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 a beneficial interest in a right; and

(b) at the time you acquired the interest:

(i) the scheme genuinely restricted you immediately disposing of the right; and

(ii) the governing rules of the scheme expressly stated that this Subdivision applies to the scheme (subject to the requirements of this Act).