ATO ID 2002/965: Income Tax -Trustee not assessable on employer contributions made to it under the employer's employee share scheme
Date of decision: 21 August 2002
Year of income: Year ending 30 June 2010
Business line: Private Groups and High Wealth Individuals

Issue
Will the Trustee of an employee share scheme Trust be assessed under sections 6-5 or 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997) on contributions it receives from an employer made to it for the purpose of and under the employer's employee share scheme?

Decision
No. The Trustee of the employee share scheme Trust will not be assessed under sections 6-5 or 6-10 of the ITAA1997 on contributions made to it by an employer for the purpose of and under the employer's employee share scheme.

Facts
The employer's employee share scheme complies with the provisions of Division 83A of the Income Tax Assessment Act 1997 (ITAA 1997). The taxpayer is a Trustee appointed for the purpose of and under the employer's employee share scheme to administer the scheme. The employer contributes amounts to the Trustee for the purpose of and under its employee share scheme.

Reasons for decision
Summary: The funds provided to the Trustee are used in accordance with the Trust Deed and Plan Rules for the sole purpose of and under the employee share scheme. The contributions constitute capital receipts to the Trustee, and are not assessable under sections 6-5 or 6-10 of the ITAA 1997.

Legislative references: Income Tax Assessment Act 1997 section 6-5 section 6-10
Subject references: Employee share schemes & options Assessable income Capital receipts Trust