Private ruling: ESS - market value
Date of advice: 24 May 2024
Published: 8 July 2024
Ruling period: year ended 30 June 2021 | year ended 30 June 2022 | year ended 30 June 2023
Date scheme commenced: 1 July 2020

Ruling: Q1: For the purposes of ascertaining the taxable discount under sections 83A-110 and 83A-315 of the Income Tax Assessment Act 1997 (ITAA 1997) and for reporting purposes under Subdivision 392-A of the Taxation Administration Act 1953 (TAA 1953), was the 'market value' of a XXX ordinary share as at xx xx xx $x.xx? | A1: Yes. | Q2: For the purposes of ascertaining the taxable discount under sections 83A-110 and 83A-315 of the ITAA 1997 and for reporting purposes under Subdivision 392-A of the TAA 1953, was the 'market value' of XXX ordinary share as at xx xx xx $x.xx? | A2: Yes. | Q3: For the purposes of ascertaining the taxable discount under sections 83A-110 and 83A-315 of the ITAA 1997 and for reporting purposes under Subdivision 392-A of the TAA 1953, was the 'market value' of a XXX ordinary share as at xx xx xx $x.xx? | A3: Yes.

Relevant facts and circumstances: The scheme that is the subject of this Ruling is identified and described in the following documents, which form part of the facts of this ruling: • Entity X - Valuation of issued shares as at 30 June 2021, prepared by XXX (Valuer) with a valuation date of 30 June 2021 and a report date of xx xx xx (FTI report 2021) • Entity X - Valuation of issued shares as at 30 June 2022, prepared by Valuer with a valuation date of 30 June 2022 and a report date of xx xx xx (FTI report 2022) • Entity X - Valuation of issued shares as at 30 June 2023, prepared by Valuer with a valuation date of 30 June 2022 and a report date of xx xx xx (FTI report 2023) (together 'Valuation Reports'). In accordance with the valuation reports, the reported mid-point value for an ordinary share in Entity X as 30 June of each income year is: Table 1: In accordance with the valuation reports, the reported mid-point value for an ordinary share in Entity X as 30 June of each income year is: Income year Value 30 June 2020 $x.xx 30 June 2021 $x.xx 30 June 2023 $x.xx The Valuation Reports were prepared in compliance with APES 225 Valuation Services standard. The X Rights Plan (Plan) is an employee share scheme for the purposes of the ITAA 1997. The rights issued by Entity X under the Plan constitute the grant of rights under an employee share plan to which Division 83-A applies. The rights are unlisted rights. The employee participants in the Plan only hold minority interests in Entity X both before and after the grant of rights under the Plan. No employee participant has or will become the owner of more than 3% of the issued shares in Entity X including any shares held by their associates, even assuming that all rights they hold, will he exercised and become shares in XXXXX Trust Pty Ltd. The terms of the rights give rise to deferred taxation under Division 83A so that Subdivision 83A-C applies and Subdivision 83A-B of the ITAA 1997 does not apply.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 83A-110 | Income Tax Assessment Act 1997 section83A-315 | Taxation Administration Act 1953 Subdivision 392-A

Reasons for decision: Detailed Reasoning - Detailed reasoning: Entity X commissioned Valuation Reports from Valuer, which arrived at a valuation for the ordinary shares of Entity X as at 30 June of each of the relevant income years. The Commissioner accepts that, based on the report data, the mid-point values arrived at represents the 'market value' for the purposes of sections 83A-110 and 83A-315 of the ITAA 1997 and for reporting purposes under Subdivision 392-A of the TAA 1953.