Private ruling: Employee share schemes
Date of advice: 5 July 2021
Published: September 2021
Ruling period: Income year ending 30 June 20XX.
Date scheme commenced: 1 July 20XX.

Ruling: Q1:  | A1: Further information in relation to ESS can be viewed on our website ato.gov.au by searching for the following Quick Code (QC) number: • QC 34343 ESS basics | Q2: Will the assessable amount reduce to nil under the employee share scheme provisions in relation to the granting of the Employee Option Plan options? | A2: Further information in relation to start-up concessions can be viewed at the following web pages: • QC 47627 Start-up concessions (interests acquired after 30 June 2015) ; and • QC 45720 Key ESS changes in detail.

Relevant facts and circumstances: You are an employee of Company X and have received an offer to participate in an Employee Option Plan offered by the company which included the following draft information: Employee Option Plan the Company's employee option plan, as amended from time to time in accordance with its terms Exercise price $0.00 Vesting dates and vesting conditions The options to vest on or prior to an Exit Event. Restrictions on disposal The options and any shares resulting from the options being exercised cannot be sold until the earlier of three years after the issue of the options unless otherwise specified in the Employee Option Plan. The following statement about tax consequences is only applicable where the grant of the Options meets the criteria to qualify for the 'start-up tax concessions' as set out in section 83A-33 of the Income Tax Assessment Act 1997 . The Company considers that this offer of Options will qualify to access the 'start-up' tax concessions in the tax legislation. On that basis: • you will not be taxed on grant, vesting or exercise of the Options; • you will only be taxed on transfer of the shares or Options; • for capital gains tax ( CGT ) purposes, the shares you receive on exercise of the Options will be deemed to have been acquired on the day the Options are granted; and • any gain or loss you make on disposal of the shares or Options will be assessed under the CGT rules. Provided you were granted the Options at least 12 months prior to disposing of the shares or Options, you should be entitled to apply the CGT discount to reduce the gain, after applying any current or prior year capital losses. The Employee Option Plan (the Plan) provides the following information: Vesting of Options Options vest: • in respect of 25% of the Options the subject of an Offer, on the date which is 12 months after the issue date of the Options (Year 1); and • in respect of the remaining 75% of the Options the subject of the Offer, on a quarterly basis over the 3 year period after the end of Year 1 (i.e. 1/12 th of the remaining Options vest at the end of each quarter following the end of Year 1). An Optionholder may exercise an Outstanding Option during the Exercise Period by: • giving to the Company a signed Exercise Notice; and • paying the Exercise Price multiplied by the number of Options being exercised. Disposal Unless otherwise consented to by the Board in writing and notwithstanding any other provision in this Employee option plan or an Offer, a legal or a beneficial interest in an Option may not be Disposed of until after: • where a Listing occurs, the earlier of: ­ the date that is one hundred and eighty (180) days following the Listing; and ­ the expiration of any underwriter imposed lock-up in connection with the Listing; and • in the case of any other Exit Event, the occurrence of that Exit Event. Issue of Ordinary Shares in respect of exercise of Outstanding Options If an Optionholder exercises Outstanding Options, the Company must: • issue the number of Ordinary Shares which corresponds with the number of Outstanding Options exercised, free from any Security Interest; • issue to the Optionholder or a trustee or nominee to hold on bare trust for that Optionholder (if determined by the Board or nominated by the Optionholder) a share certificate for those Ordinary Shares and enter the Optionholder into the Company's share register; and • lodge with the Australian Securities & Investments Commission the relevant forms to reflect the issue of the relevant number of Option Shares. Definitions and interpretation Company means Company X. Eligible Person means any employee, contractor or director (or prospective employee, contractor or director) of one or more Company Group Members selected by the Board to participate in the Employee option plan Exercise Price means in respect of an Option the exercise price determined by the Board and included in the Offer giving rise to that Option, as amended pursuant to the terms of this Employee option plan. Option means an option, issued under this Employee option plan, to acquire a newly issued Ordinary Share. Ordinary shares mean fully paid shares in the capital of the Company... You accepted the offer to participate in the Plan. You have nominated that the options granted under the Plan will be issued to a discretionary trust (the Trust) of which you are the named beneficiary. Company A is the trustee of the Trust, with the Trust owning units in a Unit Trust. It is anticipated that the options will be issued in July 20XX. Assumptions: For the purposes of this ruling it is assumed that: • you will fill out a modified acceptance offer form in relation to the options being issued to the Trust • the exercise price for the options granted under the Plan will be at least equal to the market value of an ordinary share in Intellify at the time the option is granted • the market value of an option and a share in Intellify, at the grant date will each be greater than $nil; and • you and/or Intellify have met the relevant the start-up conditions contained in sections 83A-33 and 83A-45 of the ITAA 1997.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subdivision 83A-B


Subject: Employee share schemes: Question 1: Will the start-up concessions under section 83A-33 of the Income Tax Assessment Act 1997 still apply when employee share scheme interests are issued directly to your associate? | Answer: Yes. If the conditions for the start-up concessions to apply have been met, there is no provision contained in Division 83A of the Income Tax Assessment Act 1997 (ITAA 1997) to prevent the start-up concessions from applying when the employee share scheme (ESS) interests are issued to an associate of the employee under section 83A-305 of the ITAA 1997. | Answer: Yes. As the conditions contained in sections 83A-33 and 83A-45 of the ITAA 1997 have been met, any ESS discount amount arising in relation to the options granted under the Employee Option Plan will be reduced to nil. | This ruling applies for the following period: