Private ruling: Deductions - employee share schemes
Date of advice: 19 October 2022
Published: 9 January 2023
Ruling period: For ruling questions 1 to 3, the ruling periods are the years ending 30 June 20XX to 30 June 20XX | For ruling question 4 to 5b, the ruling periods are the years ending 31 March 20XX to 31 March 20XX
Date scheme commenced: In a particular income year

Ruling: Q1: Will Company X be entitled to deduct an amount under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for irretrievable cash contributions made by Company X to the trustee (Trustee) of the Company X Employee Share Trust (Trust) to fund the subscription for, or acquisition on-market of, ordinary shares in Company X (Shares) to satisfy ESS interests issued pursuant to the Plans in respect of its Australian employees (Participants)? | A3: Yes. | Q2: Will the Commissioner seek to make a determination that Part IVA of the Income Tax Assessment Act 1936 (ITAA 1936) applies to deny, in part or in full, any deduction claimed by Company X for the irretrievable cash contributions made to the Trustee to fund the subscription for, or acquisition on-market of Shares by the Trustee, pursuant to the Plan Rules? | A4: No. | Q3: Will the provision of Options and Awards to employees of Company X under the Plans constitute a fringe benefit within the meaning of subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986)? | A7: No.

Relevant facts and circumstances: Company X 1. Company X is Australian incorporated company involved in a particular industry. 2. Company X is the head company of the Company X income tax consolidated group (Company X TCG) consisting of itself and its wholly owned Australian subsidiaries. 3. Company X is the parent entity of a corporate group consisting of itself and a number of subsidiaries, including a number of non-resident subsidiaries (collectively referred to as the Group). 4. Company X, and each of the non-resident subsidiaries are employing entities in their respective locations (Employer Entities). 5. As part of the overall remuneration and retention strategy Company X offers employees (Participants), the opportunity of equity ownership upon the satisfaction of certain service and performance conditions. Company X has implemented two employee incentive plans (collectively the "Incentive Plans"): a. Plan 1 b. Plan 2 6. Grants have been made to employees employed by the non-resident subsidiaries. However, Company X does not intend to use the Trust for employees that are not based in Australia. The consideration of contributions made with respect to non-resident Participants (and any associated Australian tax implications for Company X) is outside the scope of this ruling. 7. Company X has engaged Company Y, an external independent plan administrator, to implement and administer the Plans. Plan 1 8. The Plan was adopted at Company X's General Meeting on a certain date. The terms and conditions of the Plan are set out in the Company X Plan 1 Rules (Plan Rules). 9. The terms on which Participants are invited to participate in the Plan are set out in the offer document (Offer). 10. Broadly under Plan 1, Participants are granted an option (Option) which entitles the holder to subscribe for and be allotted, a share in Company X (Share), in each case at the Exercise Price. 11. Under Plan 1 and Plan 1 Rules there are a number of conditions to be satisfied for the Participant to acquire a Share on the exercise of the Option. 12. Options granted to Participants under the Plan Rules are intended to be subject to income tax under 13. section 83A-B or 83A-C of the ITAA 1997. Plan 2 14. Company X has also implemented Plan 2 for its employees 15. The terms and conditions of Plan 2 are set out in the Plan 2 Rules which became effective from a certain date. 16. The terms on which Participants are invited to participate in Plan 2 are set out in the grant letter (Grant Letter). The Grant Letter will outline (amongst other terms), whether the Award is a Right, Option, and/or Restricted Share, any Conditions or Dealing Restrictions, the Exercise Conditions and the expected Award Date. 17. Under Plan 2 and Plan 2 Rules there are a number of conditions to be satisfied for the Participant to acquire a Share on the exercise of the Option. Company X Employee Share Trust (Trust) 18. Company X established the Trust to facilitate the acquisition, holding of, and allocation of Shares to Participants in accordance with the Plan Rules Company X currently operates and any future plans that may be implemented. 19. It is the intention that the Trust be used to administer Awards or Shares granted under the Plans (and any new employee equity plans operated by Company X). Accordingly, the existing Plans incorporate the use of the Trust to facilitate the provision of Shares in respect of grants which have been made previously and new grants. 20. The trustee of the Trust (Trustee) is an external trustee acting in an independent capacity on behalf of the beneficiaries of the Trust. 21. The Company X Employee Share Trust Trust Deed (Original Trust Deed) was executed on a particular date. 22. Under the terms of the Original Trust Deed, the Trust broadly operates as follows: a. The objects of the Trust are for the sole purpose of: i. acquiring and holding Shares or rights to acquire Shares (which includes Options); and ii. providing beneficial interests in those Shares or rights to acquire Shares under a Plan to Participants of the Plan; and iii. conducting other activities that are merely incidental to the objects of the Trust. 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. b. Company X will instruct the Trustee to subscribe for, purchase and/or allocate a number of Shares specified in the notice. This instruction may occur at any time, depending on Company X's capital management strategy. c. In determining whether to request the Trustee to subscribe for or purchase Shares on-market, matters Company X's Board will take into account include: i. Company X's current capital management strategy; ii. the dilution impact any issue of new Shares will have; iii. the liquidity (trade volume) of Company X's Shares; iv. the Board's expectations regarding Company X's Share price movements and volatility over the short and longer term; and v. trading restrictions or anticipated activity that may prompt restrictions regarding trading of Company X's Shares. d. The Trustee will, in accordance with instructions received from the Board and pursuant to the Trust Deed acquire, deliver and allocate Shares to Participants provided that the Trustee receives sufficient payment from Company X to subscribe for or purchase Shares and/or has sufficient unallocated Shares available in the Trust. e. Allocated Shares acquired by the Trustee must be set aside and held for the benefit of identified Participants where required to do so, or permitted, by the relevant Plan Rules. Each Participant will become absolutely entitled to their Allocated Shares. f. In respect of Awards subject to vesting conditions, no interest in the Shares will arise until vesting conditions are met. g. Company X (or any other member of the Group) will not be a beneficiary of the Trust and will have no interest in the Shares held by the Trust. h. The Trustee may, prior to the termination of the Trust, apply the capital of the General Trust Property in payment of any dividend equivalent amounts payable to a Participant under the rules of that Plan, or any other capital payments permitted under the Applicable Law and Tax Guidance. 23. The express powers of the Trustee in respect of the Trust are set out in the Original Trust Deed and include: a. the power to subscribe for, purchase or otherwise acquire Shares, rights or privileges on such terms as it thinks fit, and do all things incidental to this activity b. the power to sell or otherwise dispose of Shares, rights or privileges on such terms and conditions as directed by the applicable Rules, and do all things incidental to this activity c. the power to sell or transfer the General Trust Property or Allocated Trust Property to the Participants and apply the proceeds of sale in accordance with this Deed and the applicable Rules. 24. Company X subsequently made amendments to the Original Trust Deed (Amended Trust Deed). The Amended Trust Deed was executed on a certain date. 25. Under the Amended Trust Deed: a. The Trustee has the power to subscribe for, purchase or otherwise acquire Shares or rights on such terms as it thinks fit, and do all things incidental to this activity and the power to sell or otherwise dispose of Shares or rights on such terms and conditions as directed by the applicable Rules, and do all things incidental to this activity. As a result, under the Amended Trust Deed, the Trustee is no longer able to subscribe for, purchase, sell or otherwise dispose of privileges. b. The Trustee has the power to transfer the Allocated Trust Property to the Participants in accordance with this Deed and the applicable Rules. As a result, under the Amended Trust Deed, the Trustee is no longer able to sell General Trust Property or Allocated Trust Property to Participants and apply the proceeds of sale. c. The Trustee must make dividend equivalent payments to Participants at or around the time the Shares vest and/or are transferred. Additionally, the Trustee is no longer able to make capital distributions at any time prior to the termination of the Trust. 26. Company X confirmed that the Trustee had not, undertaken any activities in relation to powers listed in the preceding paragraph. Contributions to the Trust 27. Company X will pay all costs and expenses in administering the Trust, including any amount of income or other tax payable by Company X and/or the Trustee in relation to a Plan and all reasonable costs and expenses in maintaining the corporate existence of the Trustee or incurred in connection with the acquisition, registration, disposal of or other dealing with Shares and otherwise incurred by the Trustee in carrying out its duties. 28. Company X must make irretrievable contributions to the Trust as required under the Trust Deed. In determining the amount of funds to be contributed to the Trust at any point in time, matters the Board may take into account include: a. the number of Awards granted to employees under the Plans; b. the number of Shares held by the Trust at the relevant time; c. the likelihood of Awards vesting; and d. the Board's expectations regarding Company X's Share price performance and volatility over the short and longer term. 29. All funds received by the Trustee from Company X in the form of irretrievable contributions will constitute accretions to the corpus of the Trust and no Participant will be entitled to receive a distribution of or from such funds. The funds will not be returned or repayable to Company X except where they are used by the Trustee to subscribe for Shares in Company X. 30. Any funds Company X contributes to the Trust, other than specifically in the form of a loan, may not be refunded, repaid or returned to Company X (or any member of the Group) other than by way of the Trustee paying the issue price where it subscribes for Shares in Company X. 31. Company X intends to only make irretrievable contributions to the Trust to fund the acquisition of Shares once Awards have been granted to a Participant.

Relevant legislative provisions: Income Tax Assessment Act 1936 Part IVA | Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 section 83A-10 | Income Tax Assessment Act 1997 section 83A-210 | Income Tax Assessment Act 1997 section 83A-340 | Income Tax Assessment Act 1997 subsection 130-85(4 ) | Fringe Benefits Tax Assessment Act 1986 section 67 | Fringe Benefits Tax Assessment Act 1986 subsection 136(1)

Reasons for decision: Summary: Yes, Company X will be entitled to a deduction under section 8-1 of the ITAA 1997 in respect of the irretrievable cash contributions made by Company X to the Trustee of the Trust to fund the subscription for, or acquisition on-market of Shares, as the contributions are part of an on-going series of payments in the nature of remuneration of Company X's employees. | Detailed Reasoning - Detailed reasoning: Subsection 8-1(1) of the ITAA 1997 allows you to deduct from your assessable income any loss or outgoing to the extent that it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income. However, pursuant to subsection 8-1(2), you cannot deduct a loss or outgoing to the extent that it is a loss or outgoing of capital, or of a capital nature. Company X is an Australian incorporated entity involved in a certain industry. Company X operates employee share schemes (ESS's) as part of its remuneration strategy. Under the various Incentive Plans, Company X may grant Options or Awards to employees and makes cash contributions to the Trust (in accordance with Trust Deed) which the Trustee uses to acquire shares (either on-market or by subscription) for allocation to Participants to satisfy their Rights or allocation of Shares. Company X must provide the Trustee with all the funds required to enable the Trustee to subscribe for, or acquire, the Company X shares. The cash contributions made by Company X to the Trust are irretrievable and non-refundable to Company X in accordance with the Trust Deed, as: Therefore, if Company X makes a cash contribution to the Trust to acquire or subscribe for Shares to satisfy the Options or Awards pursuant to the Incentive Plans, the amount has been incurred for the purposes of subsection 8-1(1) of the ITAA 1997. The costs incurred by Company X for the acquisition of shares to satisfy its obligations under the Incentive Plans in respect of the grant of Options or Awards arise as part of Company X's remuneration arrangements, and contributions to the Trust are part of an on-going series of payments in the nature of remuneration of its employees. As such, it is incurred in the process of carrying on a business for gaining or producing Company X's assessable income. The cash contributions will be an outgoing incurred for periodic (rather than once-off) funding of an ESS for employees of Company X. The cash contributions are made as part of an ongoing process of remunerating employees, with the Trust expected to acquire shares regularly. Nothing in the facts suggests any intention for any contribution to be retained in the Trust for an extended period of time. While the contributions may secure an enduring or lasting benefit for the employer that is independent of the year-to-year benefits that the employer derives from a loyal and contented workforce, that enduring benefit is considered to be sufficiently small. Therefore, the payments are not capital, or of a capital nature. Company X will be entitled to a deduction under section 8-1 of the ITAA 1997 in respect of the irretrievable cash contributions made by Company X to the Trustee of the Trust to fund the subscription for, or acquisition on-market, of Shares. | Summary: Yes, pursuant to section 83A-210 of the ITAA 1997, where irretrievable cash contributions are made at a time before the ultimate beneficiaries acquire the relevant ESS interest, the irretrievable cash contribution can only be deducted from the assessable income of Company X in the income year when the ESS interest is acquired by the Participant under the Plan. | Detailed Reasoning - Detailed reasoning: It is often the case that an outgoing will be both incurred and paid in the same year of income, and as such, the amount is deductible in that income year for the purposes of section 8-1 of the ITAA 1997. [1] However, section 83A-210 of the ITAA 1997 modifies this rule in certain circumstances in respect of contributions provided by an employer to a trust to purchase shares under an ESS. The effect of section 83A-210 is to deem the timing an employer incurred the outgoing to be the time when the ESS interest is acquired by a beneficiary under an arrangement, rather than the time when the employer makes the contribution to the trust, if the contribution was made before the ESS interests are acquired. Further information is available in ATO Interpretative Decision ATO ID 2010/103 Income Tax- Employee share scheme: timing of deduction for money provided to the trustee of an employee share trust . An ESS interest in a company is defined in subsection 83A-10(1) as either a beneficial interest in a share in the company, or a beneficial interest in a right to acquire a beneficial interest in a share in the company. Shares that are purchased by the Trustee to satisfy its obligation under Company X's ESS, and subsequently granted to Company X Participants pursuant to the Incentive Plans, are ESS interests for the purposes of section 83A-210. Company X's ESS satisfies the definition of an 'employee share scheme' in subsection 83A-10(2) as they are a scheme under which ESS interests are provided to the Participants in relation to their employment with Company X. The granting of the ESS interest to the Participants, the provision of the cash contributions to the Trustee, the acquisition and holding of shares by the Trustee and the allocation of shares to Participants are all interrelated components of Company X's ESS. All the components constitute an arrangement for the purposes of section 83A-210 that must be carried out so that the scheme can operate as intended. Company X intends to only make irretrievable contributions to the Trust to fund the acquisition of Shares once Options or Awards have been granted to a Participant. A Right or Option provided under Plan 2 is an indeterminate right because that Right or Option entitles the employee to acquire either a Share or cash, to be determined at a future time at the discretion of Company X. 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, pursuant to section 83A-340, be treated as if it had always been an ESS interest. Section 83A-210 applies equally to contributions made in respect of ESS interests and indeterminate rights. Therefore, an irretrievable cash contribution in respect of an indeterminate right is taken to have been paid at the acquisition time of the ESS interest. If an indeterminate right becomes an ESS interest, deductible contributions made in respect of those rights can be claimed in the income year when the ESS interest is deemed to have been acquired under section 83A-340 (this will be the year in which the indeterminate right was granted to the employee). Once this has been established, such contributions can be matched to ESS interests issued to the employee and where necessary the relevant earlier income year assessments can be amended to allow the deduction (Item 28 of subsection 170(10AA) of the ITAA 1936). It is important to note that an indeterminate right which is satisfied by the provision of cash never becomes an ESS interest and the deduction in relation to the contribution to the Trust in respect of the provision of that right is permanently deferred. However, where that ESS interest is subsequently issued to another participating employee, this employee becomes the 'ultimate beneficiary' and the deduction is available in the income year that this participating employee acquired this ESS interest. Therefore, where irretrievable cash contributions are made at a time before the Participants acquire the relevant ESS interest, the irretrievable cash contribution can only be deducted from the assessable income of Company X in the income year when the ESS interest is acquired by the Participant under the Plan, as provided by section 83A-210 of the ITAA 1997. | Summary: Yes, the irretrievable cash contributions made by Company X to the Trustee to fund the subscription for, or acquisition on-market of Shares by the Trustee are deductible to Company X in the income year when the contributions are made, if the contributions are made after the acquisition of the relevant ESS interests by the ultimate beneficiaries. | Detailed Reasoning - Detailed reasoning: Consistent with the analysis in Question 2a (above), where the contribution is made after the acquisition of the relevant ESS interests, irretrievable contributions made by Company X to the Trustee of the Trust to fund the subscription for, or acquisition of Shares by the Trust to satisfy the ESS interests granted to Participants will be deductible in the income year in which the contribution is made by Company X pursuant to section 8-1. | Summary: No, Part IVA of the ITAA 1936 will not apply to deny, in part or in full, any deduction claimed by Company X in respect of the irretrievable cash contributions made by Company X to the Trustee to fund the subscription for or acquisition on-market of Shares by the Trust. | Detailed Reasoning - Detailed reasoning: Part IVA of the ITAA 1936 is a general anti-avoidance provision which gives the Commissioner the power to cancel a 'tax benefit' that has been obtained, or would, but for section 177F, be obtained, by a taxpayer in connection with a scheme to which Part IVA applies. The Commissioner generally accepts that a general deduction may be available where an employer provides money or other property to an employee share trust where the conditions of Division 83A of the ITAA 1997 are met. In this case, the scheme does not contain the elements of artificiality or unnecessary complexity and the commercial drivers sufficiently explain the entry into the use of the employee share trust arrangement. Therefore, having regard to the eight factors set out in subsection 177D(2) of the ITAA 1936, the Commissioner has concluded that the scheme is not being entered into or carried out for the dominant purpose of enabling Company X to obtain a tax benefit. | Summary: No, the provision of Options and Awards by Company X to employees under the Plans will not be a fringe benefit within the meaning of subsection 136(1) of the FBTAA 1986 as they are excluded by paragraph 136(1)(h) of the FBTAA 1986 as ESS interests acquired under an 'employee share scheme'. | Detailed Reasoning - Detailed reasoning: An employer's liability to fringe benefits tax (FBT) arises under section 66 of the FBTAA 1986, which provides that tax is imposed in respect of the fringe benefits taxable amount of an employer for the relevant year of tax. In general terms, a 'fringe benefit' is defined in subsection 136(1) of the FBTAA 1986 as being a benefit provided to an employee or an associate of an employee 'in respect of' the employment of the employee. However, certain benefits are excluded from being a 'fringe benefit' by virtue of paragraphs (f) to (s) of the definition. Paragraph (h) of subsection 136(1) of the FBTAA 1986 excludes the following from being a 'fringe benefit': (h) a benefit constituted by the acquisition of an ESS interest under an employee share scheme (within the meaning of the Income Tax Assessment Act 1997 ) to which Subdivision 83A-B or 83A-C of that Act applies; An 'employee share scheme' is defined in subsection 83A-10(2) of the ITAA 1997 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 employee's employment. An ESS interest in a company is defined in subsection 83A-10(1) as either a beneficial interest in a share in the company, or a beneficial interest in a right to acquire a beneficial interest in a share in the company. Shares that are purchased by the Trustee to satisfy its obligation under the Incentive Plans, and subsequently granted to Participants pursuant to the Incentive Plans, are ESS interests for the purposes of section 83A-10(1). Therefore, Company X's Incentive Plans constitutes an 'employee share scheme' within the meaning of subsection 83A-10(2) because it is a scheme under which ESS interests in Company X are provided to the employees of Company X in relation to their employment with Company X. As the Rights or Options to acquire Shares or Shares granted under the Incentive Plans will be acquired by the employees at a discount, they are ESS interests to which subdivision 83A-B or 83A-C of the ITAA 1997 applies. Accordingly, the provision of Rights or Options to acquire Shares or Shares by Company X to Participants under the Plan will not be subject to FBT on the basis that they are acquired by Participants under an 'employee share scheme' (to which subdivision 83A-B or 83A-C will apply) and are thereby excluded from being a fringe benefit by virtue of paragraph 136(1)(h) of the FBTAA 1986. In addition, when a right to acquire ordinary shares is later exercised, it will not give rise to a fringe benefit as any benefit received would be in respect of the exercise of the right to acquire shares and not in respect of employment (refer ATO ID 2010/219 Fringe Benefits Tax Fringe benefit: shares provided to employees upon exercise of rights granted under an employee share scheme ). | Summary: No, the irretrievable cash contributions made by Company X to the Trustee pursuant to the Original Trust Deed, to fund the subscription for or acquisition on-market of Company X shares will not be treated as a fringe benefit within the meaning of subsection 136(1) of the FBTAA 1986 by virtue of the exclusion in paragraph 136(1)(ha) of the FBTAA 1986 on the basis that the Original Trust Deed satisfies the definition of an employee share trust in subsection 130-85(4) of the ITAA 1997. | Detailed Reasoning - Detailed reasoning: Paragraph (ha) of subsection 136(1) of the FBTAA 1986 excludes from the definition of 'fringe benefit': (ha) a benefit constituted by the acquisition of money or property by an employee share trust (within the meaning of the Income Tax Assessment Act 1997 ); Therefore, for the irretrievable cash contributions to be excluded from the definition of 'fringe benefit', the Trust must be an 'employee share trust' as defined in subsection 130-85(4) of the ITAA 1997. Subsection 130-85(4) provides that an employee share trust, for an employee share scheme, 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). In the present case, paragraphs 130-85(4)(a) and (b) are satisfied because: a) The Trust acquires shares in a company, namely Company X; and b) The Trust ensures that ESS interests as defined in subsection 83A-10(1) are provided under an employee share scheme (discussed above in Questions 2a, 2b and 4) by allocating those shares to the Participants of Company X in accordance with the Original Trust Deed and the Incentive Plans. 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 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). According to paragraph 13 of TD 2019/13, 'investing in assets other than shares or rights to shares in the employer company' is not an activity that is 'merely incidental' as it is not a natural incident or consequence of administering an ESS. [2] Neither is the provision of 'additional benefits to participants and/or employees, over and above the delivery of the ESS interests or resulting shares and any dividend equivalent payment that accrues directly from the employee's ESS interest'. The Original Trust Deed allow the Trustee to subscribe for, purchase, otherwise acquire and to sell or otherwise dispose of privileges (privileges is undefined and therefore may amount to additional benefits that may be provided to the Participants). The Original Trust Deed allows the Trustee to sell or transfer General Trust Property or sell Allocated Trust Property. However, whilst the relevant trust documents may include powers and/or duties that are broad reaching, the mere existence of those powers or duties in the trust document does not, of itself, mean that the trustee has breached the requirements to be an employee share trust. In examining whether the requirements of subsection 130-85(4) are met, it is necessary to examine the actual activities that the trustee has undertaken. [3] Company X has confirmed that the Trustee has not undertaken any of these activities of the Original Trust Deed. Therefore, while the Original Trust Deed contains powers and/or duties that are not merely incidental, the Commissioner is satisfied that the Trust does satisfy the definition of an employee share trust on the basis that the Trustee has not in fact breached the requirements to be an employee share trust in subsection 130-85(4) of the ITAA 1997. As such, the irretrievable cash contributions made by Company X to fund the subscription for, or acquisition on-market of Shares by the Trust pursuant to the Original Trust Deed will be excluded from being a fringe benefit by virtue of paragraph 136(1)(ha) of the FBTAA 1986. | Summary: No, the irretrievable cash contributions made by Company X to the Trustee pursuant to the Amended Trust Deed, to fund the subscription for, or acquisition on-market Shares will not be treated as a fringe benefit within the meaning of subsection 136(1) of the FBTAA 1986 by virtue of the exclusion in paragraph 136(1)(ha) of the FBTAA 1986 on the basis that the Amended Trust Deed satisfies the definition of an employee share trust in subsection 130-85(4) of the ITAA 1997. | Detailed Reasoning - Detailed reasoning: The Amended Trust Deed provides for the following amendments: a) The Trustee is no longer able to subscribe for, sell or otherwise dispose of privileges. b) the Trustee is no longer able to sell or transfer General Trust Property or sell Allocated Trust Property to Participants and apply the proceeds of sale. c) The Trustee must make dividend equivalent payments to Participants at or around the time the Shares vest and/or are transferred (Clause 2.1(e)). Additionally, the Trustee is no longer able to make capital distributions at any time prior to the termination of the Trust. Accordingly, the Amended Trust Deed contains only powers and/or duties that are merely incidental, as required by subsection 130-85(4)(c) of the ITAA 1997. The Amended Trust Deed, therefore, satisfies the definition of an employee share trust in subsection 130-85(4) of the ITAA 1997 and, in turn, paragraph 136(1)(ha) of the FBTAA 1986 applies to exclude the irretrievable cash contributions made by Company X to the Trustee under the Amended Trust Deed from being a fringe benefit. [1] Paragraph 15 of TR 97/7. [2] See also paragraph 11 of TD 2019/13. [3] Paragraph 6 of TD 2019/13.

Will the irretrievable cash contributions made by Company X to the Trustee of the Trust, to fund the subscription for, or acquisition on-market of, Shares by the Trustee to satisfy ESS interests issued pursuant to the Plan Rules, be deductible to Company X under section 8-1 of the ITAA 1997 at the time determined by section 83A-210 of the ITAA 1997, if the contributions are made before the acquisition of the relevant ESS interests by the ultimate beneficiaries? | Question 2b: Will the irretrievable contributions made by Company X to the Trustee of the Trust, to fund the subscription for, or acquisition on-market of, Shares by the Trustee to satisfy ESS interests issued pursuant to the Plan Rules, be deductible to Company X under section 8-1 of the ITAA 1997 in the income year when the contributions are made, if the contributions are made in the same or a later year to the income year in which the relevant ESS interests were acquired by the ultimate beneficiaries? | Question 5a: Will the irretrievable cash contributions made by Company X to the Trustee pursuant to the Original Trust Deed, to fund the subscription for, or acquisition on-market of, Shares pursuant to the Plan Rules, be treated as a fringe benefit within the meaning of subsection 136(1) of the FBTAA 1986? | Question 5b: Will the irretrievable cash contributions made by Company X to the Trustee pursuant to the Amended Trust Deed, to fund the subscription for, or acquisition on-market of, Shares pursuant to the Plan Rules, be treated as a fringe benefit within the meaning of subsection 136(1) of the FBTAA 1986? | All funds provided to the Trustee will constitute accretions to the corpus of the Trust and will not be repayable by the Trustee; and | On termination, Company X (or any other member of the Group) will not be a beneficiary of the Trust and will have no interests in the Shares held by the Trust.