Private ruling: Employee share scheme
Date of advice: 3 October 2025
Published: 17 November 2025
Date scheme commenced: X July 20XX

Ruling: Q1: Will the irretrievable cash contributions by Company A to Company B as trustee for the Company A Employee Share Trust (the Trustee) to fund the acquisition of, or subscription for, ordinary shares in Company A (Shares) by the Company A Employee Share Trust (Trust) be assessable income of the Trust under section 6-5 or 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No. | Q2: Will a capital gain or capital loss that arises for the Trustee at the time when CGT Event E5 happens in relation to Shares held by the Trustee be disregarded under section 130-90 of the ITAA 1997, if the employees acquire the shares for the same or less than the cost base of the Shares in the hands of the Trustee? | A2: Yes. This ruling for applies for the following periods 1 July 20XX to 30 June 20XX 1 July 20XX to 30 June 20XX 1 July 20XX to 30 June 20XX 1 July 20XX to 30 June 20XX 1 July 20XX to 30 June 20XX The scheme commenced on X July 20XX

Relevant facts and circumstances: 1. This ruling is based on the facts and circumstances set out below, including the following documents provided to the Commissioner, or relevant parts of them which are to be read with the description • Trust Deed • Amended Trust Deed • Plan Rules. 2. If your facts and circumstances are different from those set out below, this private ruling has no effect and you cannot rely on it. 3. Unless otherwise specified, all defined terms referred to hereinafter take their meaning from the above documents as applicable. Background 4. Company A is an Australian registered public company listed on the Australian Securities. 5. Company A is a X based provider of X services. 6. Company A is the head company of the Company A tax consolidated group (Company A TCG). 7. Company A implemented the Company A Performance Rights Plan (Plan or Rules or Plan Rules) to assist in the reward, retention and motivation of Directors, executives and staff members. 8. Company A established the Company A Employee Share Trust (Trust) to administer the Plan and any future equity plans. 9. Company A is committed to maintaining a remuneration policy that ensures employee reward for performance is competitive and appropriate to the results delivered and aligns the interests of shareholders with Directors and Executives. Remuneration structures are reviewed regularly to ensure that they satisfy the following key criteria for good reward governance practices: • competitiveness and reasonableness • acceptability to shareholders • performance linked • transparency • retention • capital management. 10. The remuneration of key Company A employees is comprised of the following elements: • Fixed remuneration, which includes base pay and other benefits • Performance linked remuneration, which consists of - Short term incentives (participation in a profit share pool, commission and discretionary bonus) - Long term incentives (performance rights). 11. Company A incurs various costs in the on-going administration of the Trust costs associated with the services provided by the Trustee of the Trust, including but not limited to: • employee plan record keeping • production and dispatch of holding statements to employees • costs incurred in the acquisition of shares on market, such as brokerage costs and the allocation of such shares to Participants • other trustee expenses such as the annual audit of the financial statements and annual income tax return of the Trust. 12. For the purposes of this Ruling: • Participants to the Plan are Australian tax resident employees of the Company A TCG, • Performance Rights may only be settled in shares, and are not settled by a cash equivalent amount in lieu of shares to be determined at a future time at the discretion of Company A. Plan Rules - Company A Performance Rights Plan 13. The Plan has been designed to allow Company A to issue long term incentive awards to eligible employees (Participants). Long term incentives may be in the form of performance rights (Performance Rights) which represent rights to acquire ordinary shares in Company A (Shares). 14. The Plan defines the following terms as follows: BadLeaver means a Participant who ceases to be an Eligible Employee and any of the following: (a) the Participant's employment is terminated, or the Participant is dismissed from office, due to the Participant's: (i) serious misconduct (including, without limitation, fraud or dishonesty) (ii) material breach of the terms of any contract of employment or office entered into by any member of the Group and that Participant (iii) gross negligence, or (iv) other conduct justifying termination of the Participant's employment or office without notice either under the Participant's contract of employment or office, or at common law. (b) the Participant is ineligible to hold his or her office for the purposes of Part 2D.6 of the Corporations Act, or (c) the Participant commences employment with, becomes a director of, or enters into a consultancy agreement or other similar arrangement with, a Competitor, within six (6) months of ceasing to be an Eligible Employee. Eligible Employee means: (a) a full-time or part-time employee of any member of the Group, or (b) a director of any member of the Group who holds a salaried employment or office with a member of the Group. For the avoidance of doubt, if there is a change in the employing entity of a Participant from one member of the Group to another member of the Group, the Participant will be considered, for the purposes of this Plan, to have continued to be an Eligible Employee at all relevant times. Invitationmeans an invitation to an Eligible Employee to apply for the grant of a Performance Right made in accordance with clause 3.2 of these Rules. Leaver means a Participant who ceases to be an Eligible Employee. Participantmeans an Eligible Employee who has been granted a Performance Right in accordance with clause 4.1. Performance Rightmeans the right of a Participant to be issued and/or transferred: (a) one or more Shares (as specified in an Invitation); or (b) the number of Shares calculated in accordance with a formula specified in an Invitation, (whether directly, or to or by the Trustee to be held for and on behalf of the Participant), subject to any Vesting Conditions and/or Performance Hurdles and/or other conditions being determined by the Board (acting reasonably) to be satisfied, waived by the Board, or deemed to have been satisfied under these Rules. Performance Right Exercise Pricemeans, with respect to a Performance Right, the price to be paid by the Participant when exercising that Performance Right as specified in the relevant Invitation. For the avoidance of doubt: the Performance Right Exercise Price for a Performance Right may be nil. Sharemeans a fully paid ordinary share in the capital of the Company. Trusteemeans the trustee, from time to time, of any employee share trust used by the Company to deliver any Plan Shares arising from the Vesting and Exercise of a Performance Right under these Rules. 15. The Plan broadly operates as follows: • Participants may receive a grant of Performance Rights under the Plan. A Performance Right represents the right to be issued and/or transferred either - one or more Shares (as specified in the Participant's Invitation) - the number of Shares calculated in accordance with a formula specified in an Invitation). • Subject to any Vesting Conditions and/or Performance Hurdles and/or other conditions being determined by the Board (acting reasonably) to be satisfied, waived by the Board, or deemed to have been satisfied under the Plan rules. • Performance Rights are granted for no consideration. • Certain performance, service or other conditions may need to be satisfied (or waived by the Board) before a Performance Right may vest (Vesting Conditions). • A Performance Right may be automatically exercised upon vesting, if it is specified in the Participant's Invitation. Alternatively, where automatic exerciseis not specified in a Participant's Invitation, the Performance Right is exercisable by the Participant by providing a completed notice in the form required by the Company, and payment of the exercise price (if any). • As soon as reasonably practicable following the vesting of a Performance Right and the automatic exercise of a Performance Right, or the exercise of a Performance Right, the Company will allot and issue and/or transfer to the Participant, either directly, or through the Trustee to be held for and on behalf of the Participant, the number of Shares to which the Participant is entitled to, and issue a substitute certificate to the Participant for any remaining Performance Rights held by the Participant. • Where a Participant who holds Performance Rights ceases employment with the Company or a subsidiary of the Company, all unvested Performance Rights will automatically be forfeited by the Participant, unless the Board determines in its discretion to permit some or all of the Performance Rights to vest. • Performance Rights are not transferable and a Participant may not sell, assign, transfer, grant a Security Interest over or otherwise deal with a Performance Right. • Participants will not be entitled to voting rights or rights to receive dividends until the Performance Rights are exercised and the Participant holds Shares. • If a Change of Control Event occurs, or the Board determines that such an event is likely to occur, the Board may determine the manner in which any or all of a Participant's Performance Rights will be dealt with, including, without limitation, in a manner that allows a Participant to participant in and/or benefit from any transaction arising from or in connection with the Change of Control Event and by determining that some or all of the Participant's Performance Rights will vest. Unless the Board determines otherwise, if a Change of Control Event occurs, any unvested Performance Rights will be immediately forfeited. • All Shares issued or transferred to a Participant under the Plan on the vesting and exercise of Performance Rights will rank pari passu in all respects with the shares of the same class from the date of issue. • The Board, at its discretion, may use an employee share trust for the purpose of holding shares, subscribing for or purchasing shares to be held on trust for eligible employee and delivering shares arising from the vest or exercise of Performance Rights. 16. To ensure compliance with the Rules, each Participant grants an irrevocable power of attorney (in the form set out in the Invitation or such other form determined by the Board) to any person nominated from time to time by the Board. Invitation to apply for Performance Rights 17. The Board may determine that an Eligible Employee may participate in the Plan and make an Invitation to that Eligible Employee to apply for a Performance Right. The terms and conditions under which the Invitation may be made are at the discretion of the Board, including as to: • the number of Performance Rights for which an Eligible Employee may apply • the grant date • the number of Shares to be issued and/or transferred to the Participant upon vesting and exercise of each Performance Right or the method of calculating such number • the Vesting Conditions (if any) relating to the Performance Rights • the Vesting Conditions (if any) relating to the Shares issued and/or transferred to Participants on vesting and exercise of each Performance Right • the Performance Hurdles (if any) and/or other conditions (if any) relating to the Performance Rights • the Performance Right exercise price (if applicable) • Performance Hurdles (if any) and/or other conditions (if any) relating to the Shares issued/and or transferred to Participants on vesting and exercise of each Performance Right • disposal restrictions attaching the resulting Shares • any other supplementary terms and conditions. 18. Each Eligible Employee who submits a completed application form is deemed to have agreed to be bound by: • the terms of the Invitation, the application and the application form • the ancillary documentation (if any) • the Plan Rules • the Company's constitution. 19. The Board may accept an application from an Eligible Employee in whole or in part. 20. Following receipt of a duly completed and signed application form, the Company will, subject to the extent that the Board has accepted the application, the Company will grant the Participant the relevant number of Performance Rights, subject to the terms and conditions set out in the Invitation, the Rules and any ancillary documentation. 21. No consideration is payable by a Participant for the grant of a Performance Right. 22. Prior to a Performance Right vesting and being exercised, a Participant does not have any interest (legal, equitable or otherwise) in any Share that is the subject of the Performance Right other than those expressly set out in the Rules. Additionally, a Participant who holds a Performance Right is not entitled to notice of, to vote at or to attend a meeting of Shareholders, and receive any dividends declared by the Company. 23. Unless the Board approves, or the relevant dealing is effected by force of law on death or legal incapacity to the Participant, the Participant may not sell, assign, transfer, grant a security interest over or otherwise deal with a Performance Right that has been granted to them. 24. To the extent of any inconsistency, the Plan Rules will prevail over any other terms and conditions advised to an Eligible Employee by the Board in an Invitation. Forfeiture of Performance Rights 25. Where a Participant who holds Performance Rights becomes a leaver, all unvested Performance Rights will automatically be forfeited by the Participant, unless the Board otherwise determines in its discretion to permit some or all of the Performance Rights to vest. Examples of the circumstances when the Board may decide to exercise its discretion to permit some or all of the Performance Rights to vest include (but are not limited to) where a Participant becomes a leaver due to death, redundancy, permanent disability, mental incapacity or retirement. 26. The Board may determine (on any conditions which it thinks fit) that some or all of the Participant's Performance Rights will not be forfeited at any relevant time, but will be forfeited at the time and subject to the conditions the Board may specify by written notice to the Participant. 27. The Performance Rights will automatically lapse where Performance Rights are forfeited in accordance with the Plan Rules. Compulsory Divestiture of Plan Shares 28. Where a Participant who holds Plan Shares becomes a Leaver, all unvested Plan Shares must be compulsorily divested, unless the Board otherwise determines in its discretion to permit some or all of the unvested Plan Shares to vest. 29. Unless otherwise determined by the Board, if a Participant becomes a Bad Leaver, all of the Participant's vested Plan Shares must be compulsorily divested. 30. The Board may decide that some or all of the Participant's Plan Shares will not be compulsorily divested, but rather, such Plan Shares may be retained by the Participant or compulsorily divested by Company A at a later time and subject to the conditions the Board may specify. 31. Unless the Board determines otherwise, if a Participant compulsorily divests a Plan Share, and that Plan Share is sold, transferred or bought-back by Company A, then Company A will be entitled to all of the proceeds. 32. A share buy-back by Company A under a compulsory divestment, can only occur where the Shares are held legally by the Participant outside of the Trust, requiring Company A to pay consideration to acquire the shares, resulting in the Trust not being involved in this process. 33. Where the Plan Share is held by the Trustee on trust for the benefit of the Participant, the Participant is deemed to have appointed an officer of the Company as their agent to instruct the Trustee to transfer beneficial ownership in the Plan Share from the Participant to another beneficiary or beneficiaries of the employee share trust nominated by the Company, or to transfer legal and beneficial ownership to a person nominated by the Company. Miscellaneous 34. Subdivision 83A of the ITAA 1997 applies to the Plan Rules, subject to the requirements of the ITAA 1997. Employee Share Trust - Company A Employee Share Trust 35. The Company A Employee Share Trust was originally established as the Company A Employee Share Trust as a sole purpose trust for the purpose of holding Shares for the satisfaction of Performance Rights under the rules of the Plan. 36. The Board may do all things necessary for the establishment, administration, operation, and funding of an employee share trust and may, in its absolute discretion, require that a Participant's Shares are held in the employee share trust. 37. The Trust provides capital management flexibility for Company A, in that the Trust can use the contributions made by Company A either to acquire Shares in Company A on-market or off-market, or alternatively to subscribe for new Shares in Company A. 38. Company B, an independent third party, is the trustee of the Trust (Trustee), and will operate the Trust in accordance with the Amended Trust Deed. 39. The Amended Trust Deed defines the following terms as follows: Accretion means any accretion, entitlement, benefit or right of whatever kind whether cash or otherwise which is issued, declared, paid, made, arises or accrues directly or indirectly to, or in respect of, a Share, including any such entitlement relating to a subdivision, consolidation or other reconstruction, any distribution from any reserve of the Company and any reduction of capital. Employee means a former, current or future employee or director of a member of the Group from time to time. ESS Interests has the meaning given to that term in section 83A-10 of the ITAA 1997 and, for the avoidance of doubt, includes Shares. Participantmeans an Employee who is a participant under a Plan and who receives (or will receive) Shares to be held by the Trustee under the terms of this Deed. Sharemeans a fully paid ordinary share in the capital of the Company. Trust Assetsmeans the property, rights and income of the Trust and includes any Accretions, Unallocated Trust Shares, and the Settlement Sum. Trust Share means a Share which is held by the Trustee in accordance with the terms of this Deed and includes any bonus shares and securities issued in respect of the Trust Share under any Bonus Issue made by the Company to shareholders and any shares subscribed for as part of a Rights Issue in respect of a Trust Share. Unallocated Trust Sharesmeans Trust Shares held by the Trustee pursuant to this Deed which are not allocated to a Participant, and for the avoidance of doubt includes any Forfeited Shares held by the Trustee pursuant to the terms of this Deed. 40. The Trust operates as follows: • Company A must provide the Trustee with the funds required for the purchase of or subscription of Shares in accordance with the Plan. • Irretrievable cash contributions are made regularly and progressively to the Trust in accordance with the rules of the Plan and the Amended Trust Deed. • These funds are used by the Trustee to acquire Shares either on-market, off-market or via a subscription for new Shares based on written instructions from Company A. • Where the rules of the Plan and relevant terms of participation (i.e. Invitation) stipulate that the Shares are to be held by the Trustee on behalf of Participants, the Trustee will hold Shares as Shares in respect of a Participant(s) (i.e. on an allocated basis). • Where the rules of the Plan include that the Shares may be held by the Trustee on behalf of Participants or employees, the Trustee will hold Shares as unallocated Shares for Participants generally. • After a disposal restriction period lapses, the Trustee must transfer the relevant number of Shares into the name of the relevant employee or any third party as directed by the relevant employee (i.e. legal title) upon a withdrawal notice being submitted to the Trustee. • The Trustee can sell Shares on behalf of a Participant where permitted to do so by the Participant. 41. In the event the Trustee is directed to purchase Shares off-market, the Shares would be acquired at arm's length and at the prevailing market price (closing price) of the date of transaction. 42. In the event of any inconsistency between the Amended Trust Deed, the Plan Rules or the terms of participation, the Amended Trust Deed will prevail. Contributions to the Trust 43. Company A, will generally wait until the Performance Rights are issued before providing the Trust with the cash necessary to acquire Shares to satisfy the acquisition or subscription of Shares related to those Performance Rights. 44. However, Company A may make cash contributions regularly and progressively to the Trust in accordance with the rules of the Plan and the Amended Trust Deed prior to the Performance Rights being granted, vesting, and where relevant, Performance Rights being exercised by the Participants. Where Company A contributes enough funding to the Trust to enable purchase of Shares in advance of when Performance Rights are likely to be granted, typically both the advanced contribution to fund this purchase and the corresponding grant of the Performance Rights should occur within the same financial year. This allows the Trustee to have enough Shares in the Trust ahead of when they need to be allocated to Participants and avoids delays in times such as blackout trading periods. Trustee's obligations and powers 45. Company A and the Trustee agree that the Trust will be managed and administered so that it satisfies the definition of " employee share trust " for the purposes of subsection 130-85(4) of the ITAA 1997. 46. The Trustee agrees to hold the Participant's Allocated Shares, and relevant other rights and entitlements arising from the Participant's Allocated Shares, on trust for the relevant Participant (beneficiary). 47. The Trustee is prevented from charging, and is not entitled to be paid or receive, whether from the Trust Assets or any Participant, any fees, charges, commission or remuneration for the operating or administering of the Trust. The Trustee may recover from the Trust Assets (excluding certain Trust property relating to Participant Shares), all reasonable disbursements actually incurred by the Trustee in performing its duties (for example brokerage incurred to purchase or dispose of Shares). Company A may pay to the Trustee from Company A's own resources any fees, commission or remuneration and reimburse any expense incurred by the Trustee for the administration of the Trust, provided such amounts are not paid directly or indirectly from Trust Assets. 48. Subject to the sole activities test, and limitations, the Trustee has the power to do the following, including (but are not limited to): (a) enter into and execute all contracts, deeds and other documents and do all acts, matters or things it in its discretion considers necessary to give effect to and carry out the trusts, authorities, rights, powers and discretions conferred on the Trustee under this Deed (b) subscribe for, purchase or otherwise acquire Trust Assets, Shares or rights which the Trustee is authorised by this Deed to acquire on such terms and conditions as it thinks fit, and do all things incidental to this activity (c) sell or otherwise dispose of Trust Assets, shares or rights which the Trustee is authorised by this Deed to dispose of on such terms and conditions as directed by the relevant Participant, and do all things incidental to this activity (d) receive dividends or distributions on the Trust Shares and to apply those amounts in accordance with this Deed (e) sell or transfer the Trust Shares and apply the proceeds of sale in accordance with this Deed and the relevant Plan Rules and relevant Terms of Participation (f) sell any rights relating to the Trust Shares and apply the proceeds of sale in accordance with this Deed (g) delegate to any person or company the exercise of all or any of the rights, powers or discretions conferred on the Trustee under this Deed and to execute any power of attorney, other instrument or cheque necessary to effect that delegation (h) employ or engage, and at its discretion, remove or suspend custodians, trustees, managers, employees or other agents, determine the powers and duties to be delegated to them, and pay any remuneration to them as it thinks fit (i) rely on any document provided by a Participant, the form of which has been approved by the Company, whether signed by the Participant or otherwise (j) take and act upon the advice or any opinion of any legal practitioner or other professional adviser (in relation to this Deed, the Plan Rules, the Terms of Participation, on the operation of the Trust or otherwise) and act on that advice in any manner it thinks fit without being liable in respect of any act done or omitted to be done by it in accordance with such advice or opinion (k) open and operate any bank account, retain on current or deposit account at any bank any money which it considers proper, and make regulations for the operation of those bank accounts including the signing and endorsing of cheques with such accounts (l) commence, conduct, defend, compound, settle, abandon or otherwise compromise any legal proceedings relating to the Trust or any Trust Assets and allow time for payment or satisfaction of any debts due and of any claims or demands by or against the Trustee in respect of the Trust (m) refer any claim or demand by or against the Trustee in respect of the Trust to arbitration and to observe and perform an award made under arbitration (n) make rules or adopt procedures not inconsistent with the provisions of this Deed, the relevant Plan Rules, and the relevant Terms of Participation in relation to the calculation and rounding off of the contributions, dividends, interest or other amounts, or to the determination of periods of time (o) undertake activities that involve bookkeeping, preparing financial, tax and regulatory statements, and other record-keeping and administrative actions necessary to operate the Trust and undertake the activities described in paragraphs 130-85(4)(a), (b) and (c) of the ITAA 1997 (p) borrow money for the purpose of acquiring Shares or rights in the Company, where no security is provided over the assets of the Trust and the interest payable on such a loan is not more than arm's length commercial rates (q) receive dividends in respect of Unallocated Trust Shares and any interest from bank accounts and using those funds to i. acquire additional Shares for the purposes of a Plan ii. pay necessary and incidental costs of administering the Trust and undertaking the activities described in paragraphs 130-85(4)(a), (b) and (c) of the ITAA 1997, including without limitation paying costs relating to the audit of the Trust and fees for professional services provided to the Trustee in relation to the Trust, provided that such costs are reasonable disbursements incurred by the Trustee iii. pay interest on loans provided to the Trust for the acquisition of Shares or rights in the Company, where the interest payable does not exceed arm's length commercial rates (r) determine who is entitled to sign on the Trustee's behalf receipts, acceptances, endorsements, releases, agreements and documents (s) do anything that the Board or Company directs, instructs or requests the Trustee to do in relation to a Plan as contemplated by this Deed (t) tdo all acts, matters or things which the Trustee in its discretion considers necessary or expedient to administer and maintain the Trust and the Trust Assets or for the purpose of giving effect to, and carrying out, the trusts, powers and discretions conferred on the Trustee by this Deed or the law. Acquisition of Shares 49. The Board will notify the Trustee when to acquire Shares. The Board must provide a notice in writing to the Trustee to instruct the Trustee to subscribe for, purchase and/or allocate the number of Shares specified in the notice, to be held by the Trustee as Trust Shares in respect of the identified Participant(s). The Board may provide a notice in writing to the Trustee, instructing the Trustee to subscribe for, purchase and/or allocate a number of Shares specified in the notice, to be held by the Trustee as Unallocated Trust Shares. 50. The Board will facilitate the provision of funds to the Trustee, for the purposes of acquiring Trust Shares, by providing funds to the Trustee from Company A or a related body corporate (as defined in the Corporations Act 2001 (Cth) (Corporations Act) (Related Body Corporate), or requesting the Trustee apply some of the capital of the Trust, or a combination of both. 51. The Trustee will acquire Shares, either on-market, off-market or by subscription of newly issued Shares by Company A. In the event the Trustee subscribes for newly issued Shares in Company A, the subscription price must be the market value of the Shares on the date on which the Shares are/were issued to the Trustee. 52. Company A must provide the required funds to the Trustee in order for the Trustee to comply with its obligations under the Amended Trust Deed to acquire Shares for a Participant. Funds received by the Trustee from Company A or a Related Body Corporate will constitute Accretions to the corpus of the Trust and will not be repaid to Company A or a Related Body Corporate. 53. Where Company A pays an amount which is in excess to the amount required to acquire Shares for a Participant(s), the Trustee may, at the direction of the Board, apply the excess to subscribe for, acquire, and/or allocate and deliver Shares in accordance with the Amended Trust Deed, relevant Plan Rules, or relevant Invitation Letter (terms of participation), or, deposit the excess funds into any bank account opened and operated by the Trustee in accordance with the Amended Trust Deed. Unallocated Trust Shares 54. Company A may direct the Trustee to allocate Unallocated Trust Shares to a Participant from time to time. Following allocation to a Participant of an Allocated Share, the Trustee must continue to hold those Allocated Shares on behalf of the Participant and on the terms of the Amended Trust Deed. Distributions in Respect of Allocated Trust Shares 55. A Participant has an absolute entitlement to receive from the Trustee, all dividends and distributions paid by Company A on their Allocated Shares to the Trustee, subject to the relevant Plan Rules, Terms of Participation and any deductions or withholding required to be made by the Trustee in accordance with the law. 56. The Trustee, on instruction from the Board and the Participant may enable the participation of any Unallocated Trust Share, or Allocated Share, in any dividend reinvestment plan of Company A. 57. Subject to the Plan Rules and any Terms of Participation (Invitation), a Participant may receive a Rights Issue from the Trustee in respect of the Participant's Allocated Shares. The Participant may request the Trustee, sell a number of rights to subscribe for the balance of the rights to which that Participant is entitled to (where the rights are renounceable), or participate in the Rights Issue by subscribing for the Shares to which that Participant is entitled, by providing sufficient funds to the Trustee. 58. In the event Company A make a Bonus Issue in respect of a Participant's Allocated Shares, the Trustee must hold the bonus Shares issued as Allocated Shares for that Participant. The Trustee must not sell the bonus Shares or transfer them to the Participant unless the Trustee sells or transfers the Allocated Shares which gave rise to the bonus Shares. 59. All Accretions that arise in respect of a Participant's Allocated Shares, other than by way of dividends, distributions, bonus Shares or securities, or Rights Issue, must be transferred by the Trustee to that relevant Participant. Transfer of Trust Shares 60. The Trustee may at the direction of the Participant, sell any of the Participant's Allocated Shares. On the sale of any Allocated Shares, the Trustee must apply the proceeds of the sale, first, in payment of any tax liability incurred by the Trustee resulting from the sale, second, in payment of any brokerage and other costs and expenses incurred by the Trustee in connection with the sale, and third, pay the relevant balance of proceeds from the sale to the Participant. Termination of Trust 61. In the event the Trust is terminated and wound up, any Trust Assets remaining in the Trust (after the Trustee pays relevant debts and liabilities, distributes Allocated Shares and relevant net income (if any) to Participants), will be treated at surplus assets of the of the Trust and be applied to either establish and maintain an employee share or option trust for the benefit of all or any employees of Company A, or a subsidiary of Company A, or provided to a charity nominated by Company A. The Trustee must not pay any balance of the Trust Assets to Company A, or a Related Body Corporate.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 subsection 8-1(1) | Income Tax Assessment Act 1997 subsection 8-1(2) | Income Tax Assessment Act 1997 paragraph 8-1(2)(a) | Income Tax Assessment Act 1997 section 20-20 | Income Tax Assessment Act 1997 subsection 20-20(2) | Income Tax Assessment Act 1997 subsection 20-20(3) | Income Tax Assessment Act 1997 subsection 20-25(1) | Income Tax Assessment Act 1997 section 20-30 | Income Tax Assessment Act 1997 section 25-5 | Income Tax Assessment Act 1997 section 40-880 | Income Tax Assessment Act 1997 Division 83A | Income Tax Assessment Act 1997 section 83A-10 | Income Tax Assessment Act 1997 paragraph 83A-10(1) | Income Tax Assessment Act 1997 subsection 83A-10(2) | Income Tax Assessment Act 1997 Subdivision 83A-B | Income Tax Assessment Act 1997 subsection 83A-20(1) | Income Tax Assessment Act 1997 Subdivision 83A-C | Income Tax Assessment Act 1997 section 83A-340 | Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 Division 104 | Income Tax Assessment Act 1997 paragraph 104-35(5)(c) | Income Tax Assessment Act 1997 paragraph 104-155(5)(c) | Income Tax Assessment Act 1997 section 130-85(4) | Income Tax Assessment Act 1997 paragraph 130-85(4)(a) | Income Tax Assessment Act 1997 paragraph 130-85(4)(b) | Income Tax Assessment Act 1997 paragraph 130-85(4)(c) | Income Tax Assessment Act 1997 subsection 995-1(1) | Income Tax Assessment Act 1936 subsection 6(1) | Income Tax Assessment Act 1936 Division 6 | Income Tax Assessment Act 1936 section 95 | Income Tax Assessment Act 1936 subsection 95(1) | Income Tax Assessment Act 1936 Part IVA | Income Tax Assessment Act 1936 section 177A | Income Tax Assessment Act 1936 section 177C | Income Tax Assessment Act 1936 section 177D | Income Tax Assessment Act 1936 section 177F

Reasons for decision: Summary: The irretrievable cash contributions made by Company A to the Trustee in accordance with the Plan and the Amended Trust Deed to fund the acquisition of, or subscription for, Shares will not be assessable income of the Trust under sections 6-5 or 6-10. | Detailed Reasoning - Detailed Reasoning: Irretrievable cash contributions It must be determined as a conclusion of fact whether the contributions made by Company A to the Trustee are irretrievable cash contributions. The Amended Trust Deed provides that the Trustee holds the funds on trust for all beneficiaries, in the manner required by the Plan. The Trustee must comply with any direction of the Board to acquire Shares on behalf of a Participant in accordance with the Plan and must apply any amount paid to it by Company A or a Participant, in accordance with the Plan and any such direction of the Board. The Amended Trust Deed enables the Trustee to discharge its obligations under the Amended Trust Deed and Plan and for no other purpose. Accordingly, a refund of any contributions by the Trustee would be in breach of the powers of the Trustee under the Amended Trust Deed. The Amended Trust Deed states that neither Company A nor any associate of Company A are beneficiaries of the Trust and have no entitlement to any Shares forming part of the Trust at any time. Accordingly, a contribution made to the Trust will not be refundable or retrievable by Company A (other than as consideration for Shares under the terms of the Amended Trust Deed). The above terms support the conclusion that the cash contributions made by Company A to the Trustee are irretrievable. Assessable income of the Trust under section 6-5 or 6-10 The total assessable income of a trust estate is calculated as if the trustee were a resident taxpayer in respect of that income (subsection 95(1)). Subsection 6(1) states that 'assessable income' has the meaning given by subsection 995-1(1), which relevantly has the meaning given by sections 6 5 and 6-10. The assessable income of a taxpayer includes income under ordinary concepts (section 6-5) or statutory income (section 6-10). Section 10-5 contains a summary list of the provisions for statutory income. None of the provisions listed in section 10-5 are relevant in the present circumstances. Therefore, the irretrievable cash contributions made by Company A to the Trustee of the Trust will not be assessable income under section 6-10. The contributions will only be included in the calculation of the net income of the Trust under section 95 if they are assessable as income according to ordinary concepts under section 6-5. Receipts of a capital nature do not constitute income according to ordinary concepts, whether or not incurred in carrying on a business. In ATO Interpretative Decision ATO ID 2002/965 Income Tax - Trustee not assessable on employer contributions made to it under the employer's employee share scheme (ATO ID 2002/965), the Commissioner expresses the view that funds provided to the trustee of an employee share scheme (ESS) for the sole purpose of providing shares under an ESS will constitute capital receipts to the trustee and are not assessable under sections 6-5 or 6-10. An ESS is a scheme under which ESS interests in a company are provided to employees of a company, or their associates, in relation to their employment (subsection 83A-10(2)). An ESS interest is a beneficial interest in a share in a company or a right to acquire a beneficial interest in a share in a company (subsection 83A-10(1)). Where an Invitation specifies that a Participant has a right to be issued and/or transferred a number of Shares calculated in accordance with a formula, the Performance Rights provided under the Plan are indeterminate rights for the purposes of section 83A-340. This is because the number of Shares that the Participant may receive is not known at the time the Performance Right is granted. Therefore, such an award under the Plan is not a beneficial interest in a right to acquire a beneficial interest in Shares unless and until the time when it is determined by the Board that they will be satisfied by the provision of Shares. Although the indeterminate right is not an ESS interest within the meaning of subsection 83A-10(1) at the time it is granted, where it is ultimately satisfied with shares instead of cash (or when the number of shares the employee is entitled to receive is determined), the indeterminate right will, under section 83A-340, be treated as if it had always been an ESS interest. When the number of shares the employee is entitled to receive is determined, under the Plan, the Participant will acquire Performance Rights, with each being a beneficial interest in a right to acquire a beneficial interest in a share in a company or a right to acquire a beneficial interest in a Share. Therefore, the Plan is an 'employee share scheme' within the meaning of subsection 83A-10(2) because it is a scheme under which beneficial interests to acquire beneficial interests in shares are provided to employees in relation to their employment. | Detailed Reasoning - Conclusion: The irretrievable cash contributions made by Company A to the Trustee under the terms of a Plan and the Amended Trust Deed are to be used for the sole purpose of acquiring, holding, and transferring Shares for the benefit of Participants. Accordingly, the irretrievable cash contributions constitute capital receipts to the Trustee and will not be assessable income of the Trustee under sections 6-5 or 6-10. Given that the irretrievable cash contributions made by Company A to the Trustee are neither ordinary nor statutory income under sections 6-5 or 6-10, they will not be included in the net income of the Trust and cannot be assessed to the Trustee under section 95 in Division 6. | Detailed Reasoning - Question 2: Will a capital gain or capital loss that arises for the Trustee at the time when CGT Event E5 happens in relation to Shares held by the Trustee be disregarded under section 130-90, if the employees acquire the shares for the same or less than the cost base of the Shares in the hands of the Trustee? | Summary: CGT event E5 will happen to the Trustee in relation to Shares held by the Trustee under the Plan at a time when a Participant becomes absolutely entitled to those Shares under the terms of the Plan. A capital gain or loss that arises to the Trustee at the time when CGT event E5 happens in relation to Shares held by the Trustee under the Plan will be disregarded under section 130-90 if the Participants acquire the Shares for the same or less than the cost base of the shares in the hands of the Trustee. | Detailed Reasoning - Detailed Reasoning: Under section 102-20, an entity can make a capital gain or loss if, and only if, a CGT event happens. Participants become absolutely entitled to a Share under the Plan - CGT event E5 Under subsection 104-75(1), CGT event E5 happens if a beneficiary becomes absolutely entitled to a CGT asset of a trust (except a unit trust or a trust to which Division 128 applies) as against the trustee. The time of the event is when a beneficiary becomes absolutely entitled to the asset (subsection 104-75(2)). If CGT event E5 happens, the trustee may make a capital gain or loss if the market value of the asset, at the time of the event, is more than its cost base or less than the asset's reduced cost base respectively (subsection 104-75(3)). In the present case, the Trust is neither a unit trust nor a deceased estate to which Division 128 applies. Subsection 130-85(2) treats a beneficiary as absolutely entitled to the relevant share from the time of acquisition of the ESS interest until they no longer have the ESS interest in the share. Subsection 130-85(2) only applies if the following requirements under subsection 130-85(1) are satisfied: • the beneficiary acquires an ESS interest under an ESS • Subdivision 83A-B or 83A-C applies to the ESS interest, and • the ESS interest is, or arises because of, an interest the beneficiary holds in an employee share trust (EST). Participants acquire ESS interest under an ESS (paragraph 130-85(1)(a)) As stated in response to Question 1, as Participants are granted Performance Rights under the Plan in relation to their employment, which provide them with a beneficial interest in a right to acquire a beneficial interest in Shares, they will be taken to have acquired ESS interests under an ESS and paragraph 130-85(1)(a) will be satisfied. Subdivision 83A-B or 83A-C applies to the Shares Appreciation Rights or Performance Rights (paragraph 130-85(1)(b)) Subsection 83A-20(1) is the key condition that an ESS interest must meet for Subdivision 83A-B or 83A-C to apply. Subsection 83A-20(1) states: This Subdivision applies to an ESS interest if you acquire the interest under an employee share scheme at a discount. As Participants may acquire Performance Rights under the Plan at a discount or for nil consideration (i.e. at a discount), Subdivision 83A-B will apply to those Rights (unless Subdivision 83A-C applies instead). Therefore, paragraph 130-85(1)(b) is satisfied. The ESS interest arose because of an interest the Participants hold in an EST (paragraph 130-85(1)(c)). Subsection 130-85(4) provides that an EST for an ESS (having the meaning given by subsection 83A-10(2)) is a trust whose sole activities are: (a) obtaining *shares or rights in a company, and (b) ensuring that *ESS interests in the company that are beneficial interests in those shares or rights are provided under the employee share scheme to employees, or to associates of employees, of: (i) the company, or (ii) a *subsidiary of the company, and (c) other activities that are merely incidental to the activities mentioned in paragraphs (a) and (b). The beneficial interest in a share and the right to acquire a share and the beneficial interest in the share that is acquired on the exercise of a right or option are both ESS interests within the meaning of subsection 83A-10(1). An 'employee share scheme' is defined in subsection 83A-10(2) as a scheme under which ESS interests in a company are provided to employees or associates of employees (including past or prospective employees) in relation to the employees' employment. As stated in response to Question 1, the Plan is an ESS within the meaning of subsection 83A-10(2) because it is a scheme under which rights to acquire beneficial interests in Shares are provided to employees in relation to their employment. Company A has established the Trust to facilitate the Plan by acquiring Shares and allocating those Shares to Participants, in order to satisfy the Performance Rights acquired under the ESS. The beneficial interest in the Share is itself provided under the same Plan under which Performance Rights to acquire Shares are provided to Participants in relation to the Participants' employment, being an ESS as defined in subsection 83A-10(2). Therefore, paragraph 130-85(4)(a) and (b) of the definition of an EST are satisfied because: • the Trustee acquires Shares • the Trustee ensures that ESS interests, are provided under an ESS by allocating those shares to the Participants in accordance with the Amended Trust Deed and the Plan. Undertaking the activities mentioned in paragraphs 130-85(4)(a) and 130-85(4)(b) will also require that the Trustee undertake incidental activities that are a function of managing the Trust. Paragraph 130-85(4)(c) provides that a trustee can engage in activities that are merely incidental to those described in paragraphs 130-85(4)(a) and (b). The phrase 'merely incidental' takes its ordinary meaning, with further guidance drawn from the context and purpose of the legislation in which it appears. 'Merely incidental' is not defined in the legislation and has not been judicially considered in the context of subsection 130-85(4). The Macquarie Dictionary defines 'merely' to mean: 'only as specified, and nothing more'. 'Incidental' is defined as 'happening or likely to happen in fortuitous or subordinate conjunction with something else'. The Commissioner's views on the types of activities that are merely incidental and not merely incidental are set out in Taxation Determination TD 2019/13: Income tax: what is an 'employee share trust'? (TD 2019/13). Whether the Trust is an EST for the purposes of subsection 130-85(4) requires an analysis of what the Trustee actually does, not just the powers and duties that are prescribed in the Amended Trust Deed. Activities that result in employees being provided with additional benefits (such as the provision of financial assistance, including a loan to acquire the shares) are not considered to be merely incidental. In the present case, the Amended Trust Deed supports the conclusion that the Trustee may only use cash contributions received from Company A to acquire Shares for Participants in accordance with the Plan. All other duties and general powers listed in the Amended Trust Deed are considered to be merely incidental to the functions of the Trustee in relation to its dealing with Shares to be acquired for Participants and paragraph 130-85(4)(c) is satisfied. Therefore, the Commissioner considers the Trust to be an EST based on the terms of the Amended Trust Deed and paragraph 130-85(1)(c) is satisfied. As all of the conditions in subsection 130-85(1) are satisfied, CGT event E5 is the CGT event that will apply under the terms of the Plan at the time that Participant becomes absolutely entitled to the Shares as against the Trustee. Exemptions under section 130-90 Any capital gain or capital loss that the Trustee makes, if CGT event E5 happens, is disregarded if section 130-90 applies. Shares held to satisfy the future exercise of rights acquired under employee share schemes: subsection 130-90(1) Subsection 130-90(1) applies to disregard any capital gain or loss made by an employee share trust if all of the following apply: • the CGT event is CGT event E5 or E7 (paragraph 130-90(1)(a)) • the CGT event happens in relation to a share (paragraph 130-90(1)(b)) • the beneficiary had acquired a beneficial interest in the share by exercising a right (paragraph 130-90(1)(c)) • the beneficiary's beneficial interest in the right was an ESS interest to which Subdivision 83A-B or 83A-C (about employee share schemes) applied (paragraph 130-90(1)(d)). As stated above, CGT event E5 will apply under the terms of the Plan when the Participant becomes absolutely entitled to Shares as against the Trustee. Under subsection 130-85(2), Participants are taken to be absolutely entitled to the Shares held by the Trustee from the time they were granted the Performance Rights under the terms of the Plan. Therefore, paragraph 130-90(1)(a) will be satisfied. Paragraph 130 90(1)(b) is satisfied as CGT event E5 happens in relation to a share, being a Share in the capital of Company A held by the Trustee to which a Participant is absolutely entitled upon the vesting (or exercise, if applicable) of a Performance Right granted by the Plan. Paragraph 130-90(1)(c) is satisfied as a Participant will have acquired a beneficial interest in a Share on the exercise of a Performance Right and being allocated the Share. Paragraph 130-90(1)(d) is satisfied because as stated above: • the Plan is an ESS for the purpose of Division 83A as it is an arrangement under which an ESS interest is provided to a Participant in relation to their employment • Subdivision 83A-B or 83A-C will apply, as Participants may acquire Performance Rights under the Plan at a discount and are subject to performance hurdles. Accordingly, all the conditions in subsection 130-90(1) have been satisfied. | Detailed Reasoning - Conclusion: As all of the conditions in subsection 130-90(1) are satisfied, any capital gain or capital loss that arises for the Trust at the time when CGT event E5 happens will be disregarded if the Shares are acquired by the employee (by exercising the Performance Rights) for the same or less than the cost base of the Shares in the hands of the Trust.

Does IVA apply to this private ruling?: Part IVA of the Income Tax Assessment Act 1936 contains anti-avoidance rules that can apply in certain circumstances where you or another taxpayer obtains a tax benefit, imputation benefit or diverted profits tax benefit in connection with an arrangement. | If Part IVA applies, the tax benefit or imputation benefit can be cancelled (for example, by disallowing a deduction that was otherwise allowable) or you or another taxpayer could be liable to the diverted profits tax. | We have not fully considered the application of Part IVA to an associated or wider arrangement of which that arrangement is part. | If you want us to rule on whether Part IVA applies to a wider associated arrangement of which the current arrangement is part, we will need to obtain and consider all the facts about the wider arrangement which are relevant to determining whether Part IVA may apply. | For more information on Part IVA, go to our website ato.gov.au and enter 'part iva general' in the search box on the top right of the page, then select 'Part IVA: the general anti-avoidance rule for income tax'. | Reasons for decision: These reasons for decision accompany the Notice of private ruling for the Trustee for Company A Share Trust. | All legislative references are to provisions of the Income Tax Assessment Act 1936 (ITAA 1936) and Income Tax Assessment Act 1997 (ITAA 1997), unless otherwise indicated. | Will the irretrievable cash contributions by Company A to the Trustee to fund the acquisition of, or subscription forShares by the Trust be assessable income of the Trust under section 6-5 or 6-10?