Taxation Determination

TD 2014/21W

Income tax: where a right to acquire a beneficial interest in a share is granted subject to shareholder approval, is the right an 'indeterminate right' within the meaning of subsection 83A-340(1) of the Income Tax Assessment Act 1997?

• Please note that the PDF version is the authorised version of this withdrawal notice.
  There is a Compendium for this document: TD 2014/21EC .
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Notice of Withdrawal

Taxation Determination TD 2014/21 is withdrawn with effect from today.

1. The Determination addresses the question of whether a right to acquire a beneficial interest in a share that is granted subject to subsequent shareholder approval is a right covered by section 83A-340 of the ITAA 1997 ('indeterminate rights'). The Commissioner ruled that, where the employee acquires only a right to have the matter put to shareholders and nothing more, that right was not a right covered by section 83A-340 of the ITAA 1997 or section 83A-15 of the Income Tax (Transitional Provisions) Act 1997 (ITTPA).

2. The Federal Court in Davies v FC of T [2015] FCA 773; 2015 ATC 20-520 held that a right created in contract to a share or a right to shares, which was subject to shareholder approval was a right which became a right to acquire a beneficial interest in a share for the purposes of section 83A-15 of the ITTPA. The reasoning in this decision concerning the existence of a right covered by section 83A-15 of the ITTPA is inconsistent with the approach taken in the Determination.

3. The Determination does not apply to schemes entered into after its withdrawal. The Commissioner is reconsidering the position with a view to issuing a replacement product.

Commissioner of Taxation
9 September 2015

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Previously issued as TD 2014/D16

References

ATO references:
NO 1-77T56NX

Related Rulings/Determinations:

TR 2006/10
CR 2006/101
CR 2011/19

Subject References:
employee share schemes
indeterminate rights

Legislative References:
ITAA 1936 Pt III Div 13A
ITAA 1936 Pt IVA
ITAA 1997 83A-10(1)
ITAA 1997 83A-340
ITAA 1997 83A-340(1)
ITAA 1997 83A-340(2)
ITAA 1997 Div 83A
IT(TP)A 1997 83A-15

Case References:
Fowler v. Federal Commissioner of Taxation
[2013] FCAFC 69
(2013) 212 FCR 149
2013 ATC 20-398

Fowler v. Federal Commissioner of Taxation
[2012] FCA 1040
2012 ATC 20-351
Federal Commissioner of Taxation v. McWilliam
[2012] FCAFC 105
(2012) 204 FCR 478
2012 ATC 20-339
(2012) 89 ATR 845