Private ruling: Employee share scheme
Date of advice: 20 October 2025
Published: 8 December 2025
Ruling period: This ruling for question 1 to 5 applies for the following income tax periods | Income Tax year ending 30 June 20XX | Income Tax year ending 30 June 20XX | Income Tax year ending 30 June 20XX | Income Tax year ending 30 June 20XX | Income Tax year ending 30 June 20XX | This ruling for questions 6 to 8 applies for the following FBT periods | Fringe Benefits Tax year ending 31 March 20XX | Fringe Benefits Tax year ending 31 March 20XX | Fringe Benefits Tax year ending 31 March 20XX | Fringe Benefits Tax year ending 31 March 20XX | Fringe Benefits Tax year ending 31 March 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will A Co (also referred to as the Company) as head company of the A Co tax consolidated group (A TCG) obtain an income tax deduction, pursuant to section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) in respect of the irretrievable cash contributions made by A Co to the Trustee of the A Co Employee Share Trust (Trust) to fund the subscription for or acquisition on-market of fully paid ordinary shares in A Co (A Co Shares) by the Trust for the purpose of the employee share plans (the Plans)? | A1: Yes. | Q2: Will A Co as head company of the A TCG obtain an income tax deduction, pursuant to section 8-1 of the ITAA 1997, in respect of costs incurred by A Co in relation to the ongoing administration of the Trust including expenses relating to preparation of tax returns and obtaining tax advice for the Trust? | A2: Yes. | Q3: Will irretrievable cash contributions made by A Co to the Trustee, to fund the subscription for or acquisition on-market of A Co Shares by the Trust, be deductible to A Co at a time determined by section 83A-210 of the ITAA 1997 where the contributions are made before the acquisition of the relevant ESS interests? | A3: Yes. | Q4: If the Trust satisfies its obligation under the Plans by subscribing for new A Co Shares, will the subscription proceeds be included in the assessable income of A Co under section 6-5 or section 20-20 of the ITAA 1997 or trigger a capital gains tax (CGT) event under Division 104 of the ITAA 1997? | A4: No. | Q5: 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 full, any deduction claimed by A Co as head company of the A TCG in respect of the irretrievable cash contributions made by A Co to the Trustee to fund the subscription for or acquisition on-market of A Co Shares by the Trust for the purpose of the Plans? | A5: No. | Q6: Will the provision of Rights and Shares by A Co or A Co subsidiary Employer Entities to employees of A Co under the Plans be a fringe benefit within the meaning of subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986)? | A6: No. | Q7: Will the irretrievable cash contributions made by A Co or any of A Co's subsidiary Employer Entities to the Trustee, to fund the subscription for or acquisition on-market of A Co Shares, be treated as a fringe benefit within the meaning of section 136(1) of the FBTAA 1986? | A7: No. | Q8: Will the Commissioner seek to make a determination that section 67 of the FBTAA 1986 applies to increase the fringe benefits taxable amount to A Co or any of A Co's subsidiary Employer Entities, by the amount of tax benefits gained from irretrievable cash contributions made by A Co to the Trustee, to fund the subscription for or acquisition on-market of A Co Shares for the purposes of the Plans? | A8: No.

Relevant facts and circumstances: A Co an Australian listed company and the head company of an income tax consolidated group (the A TCG). A Co's current employee share plans are: • A • B • C • D • E • F • y Sacrifice Plan G • y Sacrifice Plan H (together, the Plans). Performance Rights Plans The Performance Rights issued under the Performance Rights Plan (Plan A, Plan B, Plan C, Plan D, Plan E and Plan F) are governed by Performance Rights Plan Rules (PRPR). Under the PRPR, the Board may determine the Eligible Employees who are eligible to participate in the Plan from time to time. To the extent of any inconsistency, the terms and conditions advised to an Eligible Employee by the Board in an invitation will prevail over any other provision of the rules. Eligible Employees are issued invitations to apply for a grant of Performance Rights which vest according to performance criteria. The Invitation will outline the number of Performance Rights offered and the performance conditions. Upon acceptance of an Invitation, the Board will grant the Performance Rights to the Eligible Employee free of charge and under the name of the Eligible Employee, unless the Board determines otherwise. The Performance Rights will vest at the end of the Performance Period, subject to the satisfaction of the Vesting Conditions. At the end of a Performance Period, the Board determines the proportion of Performance Rights which vest to the participant. Once the Performance Rights vest and are exercised or following the exercise of a Vested Right, the Participant will be entitled to one Share for each Vested Right. Performance Rights can lapse by: • expiry of the right in accordance with a provision of the PRPR (including in accordance with a term of an Invitation) • the receipt of a notice from the Participant to the effect that they have elected to surrender the Performance Right • the Board determining the Participant has acted fraudulently, dishonestly or wilfully breached the Participant's duties. Participants are subject to transfer restrictions under the PRPR. A Participant may not deal with a Share acquired under the PRPR (a Restricted Participant Share) until the end of any period specified by the Board in the invitation or the end of any other period determined by the Board in accordance with Applicable Law. The PRPR sets out various conditions where clawback policy may apply to the Participant. In the event of clawback, the Board may determine that any Performance Rights held by the Participant will lapse or be deemed to be forfeited. Where Restricted Participant Shares held by the Trustee are forfeited, the Participant's rights in the Restricted Participant Shares will be extinguished for nil consideration and the Restricted Participant Shares will be held as general trust property according to the Trust Deed. The Board may, at any time in the future, direct the Trustee to hold the Restricted Participant Shares for the benefit of a different or new Participant. The PRPR provides that Subdivision 83A-C of the ITAA 1997 applies to the plan subject to the requirements of the ITAA 1997. Any Shares issued, transferred or allocated on the Vesting and exercise (if required) of Performance Rights rank equally with other shares then on issue. The Shares will be held by the Trustee on behalf of the Participant subject to conditions as specified in the PRPR. Where Shares are held by the Trustee on behalf of a Participant, those Shares will be registered in the name of the Trustee. Plan A Plan A is a short-term incentive plan for XX and XX staff. It is governed by the terms contained in the PRPR which are set out above. Participation in the Plan A is through annual invitation and operates at the discretion of the Board. To the extent of any inconsistency between the terms of the Invitation and the Plan A guide and the PRPR, the terms of the Invitation will prevail to the extent of the inconsistency. The Base Award is calculated by multiplying the Total Fixed Remuneration (TFR) at the commencement of the performance period (i.e. 1 July or when the Participant commences in an eligible role) by the participating percentage. Eligible employees are invited to participate in the Plan A and accept the offer online. Participant will be asked to elect the proportion of the Plan A that will be delivered as Performance Rights. The Plan A can be taken as either 100% Performance Rights, or 50% Performance Rights and 50% cash. The number of Performance Rights granted is based on the Performance Rights ($ value) divided by the Volume Weighted Average Price (VWAP) of the Company Share traded on the ASX over the first five trading days of the performance period as set out in the invitation letter. The number of Performance Rights granted, plus the value of the potential cash award, represents the Maximum Plan A Opportunity. A Performance Right granted under the Plan A is a Right to one Share subject to satisfaction of the performance conditions and other terms set out in the Plan A Guidelines and the PRPR. Subject to the achievement of the relevant performance conditions, at the end of the performance period, some or all the Performance Rights may vest and convert to Vested Rights. As part of the acceptance process, the Participant can elect either a default option where rights awarded on vesting will be automatically exercised to shares with no further restrictions or holding conditions, or a flexible option which gives greater flexibility around exercising and tax deferral periods. If the Flexible Option is elected, the Participant will have the option to select a tax deferral and non-disposal period (Holding Condition) to apply to any Shares issued following exercise of the Vested Rights (A Vested Right is a guaranteed Right to one Share). Vested Rights do not automatically convert to a Share prior to their expiry date and must be exercised at the election of the holder. If a Holding Condition is elected, any shares awarded to the Participant will be awarded as Restricted Shares. Vesting of the Plan A is based on assessment of the Plan A performance measures, any exercise of the Board's discretion, the terms of the Invitation, the Plan A Guidelines and the PRPR. Unvested Performance Rights remain subject to performance conditions and are not eligible to receive dividends. Participants will receive the net Accumulated Dividend Payment after exercise of Vested Rights. Participants will be entitled to all dividends paid or Restricted Shares and Shares held. Plan A Participants are required to acquire and hold a minimum shareholding in A Co in line with the Directors' and Executives' Shareholding Policy. This can be achieved through holding both A Co shares and Vested Rights. Plan B Plan B is a long-term incentive plan for XX and XX staff. It is designed to align and incentivise long term performance with shareholder interests. Participation in the Plan B is through an annual invitation to eligible employees and operates at the discretion of the Board. The Plan B Guide forms part of and is incorporated by reference into the terms of the invitation. To the extent of any inconsistency between the terms of the invitation and the Plan B Guide and the PRPR, the terms of the invitation will prevail to the extent of the inconsistency. The Base Award is calculated by multiplying the TFR at the commencement of the Performance Period (i.e. 1 July) by the Plan B participating percentage (as outlined in the invitation letter). The Plan B is offered in Performance Rights. The number of Performance Rights granted is based on the Plan B Base Award ($ value) divided by the VWAP of Company Shares traded on the ASX over the first X trading days of the performance period as set out in the invitation letter. A Performance Right granted under the Plan B is a Right to one Share subject to satisfaction of the performance conditions, other terms set out in the Plan B Guidelines and the PRPR. Subject to the achievement of the relevant performance conditions, at the end of the performance period, some or all of the Performance Rights may vest and convert to Vested Rights. A Vested Right is a guaranteed Right to one Share. Vested Rights do not automatically convert to a Share prior to its expiry date and must be exercised at the election of the holder. As part of the acceptance process, the Participant can elect either a default option where rights awarded on vesting will be automatically exercised to shares with no further restrictions or holding conditions, or a flexible option which gives greater flexibility around exercising and tax deferral periods. The Plan B performance measures include a XX% weighting on Relative Total Shareholder Return (rTSR) and XX% weighting on specific strategic measures. Unvested Performance Rights remain subject to performance conditions and are not eligible to receive dividends. Participants will receive the net Accumulated Dividend Payment after exercise of Vested Rights. Participants will be entitled to all dividends paid or Restricted Shares and Shares held. Plan C Plan C is A Co's staff short-term incentive plan. Plan C operates at the discretion of the Board. Participation in the Plan C is extended through an X invitation and, unless otherwise determined, the invitation will be issued on terms consistent with the Plan C Guidelines and the PRPR. To the extent of any inconsistency between the terms of the invitation and the Plan C Guidelines and the PRPR, the terms of the invitation will prevail to the extent of the inconsistency. Participants are eligible to participate if they are a full-time or a part-time direct employee of A Co who was employed before 1 April and remain employed at the end of the Plan C Performance Period (30 June). Plan C Opportunity is calculated by multiplying the Participating TFR by the Participating %. The outcome of the Plan C is driven by the achievement of the Company, Team (if applicable) and Individual performance objectives. The final award is calculated by multiplying the Plan C Opportunity by the total performance outcomes. Plan C comprises of an offer to Participants of a combination of cash and/or Shares (with mandatory X-month non-disposal period). If the Participant does not accept the offer and make an election, the award will default to 100% cash payment. If Participant choose to receive either XX% or XX% of the total award in shares, the cash amount will be reduced accordingly. If the Participant elects to receive a portion or all of the Plan C in shares, the value of the award will be increased as Participant will be awarded Unvested Rights with a value equivalent to XX% of the share election. The Plan C Share (Tranche 1) portion of the award will be awarded as Restricted Shares with a X-month mandatory non-disposal period. The uplift portion (Tranche 2) of the Plan C awarded as Unvested Rights will have a mandatory X-month non-disposal period and a X-month forfeiture condition (the right to the shares will be forfeited if the Participant leave within X months of the Unvested Rights being granted). The number of Restricted Shares and Unvested Rights granted will be the value of the share component of the Plan C Award divided by the VWAP of A Co shares traded on the ASX over the X trading days prior to issue. Under the Plan C, Participant will receive the dividends on Restricted Shares and Ordinary Shares. Unvested Rights do not attract dividends, as such there are no dividends associated with the uplift portion of the Plan C until the end of the X-month restriction period when Unvested Rights convert to Ordinary Shares. Plan D Plan D is A Co's long-term incentive plan for senior managers. It is designed to align and incentivise long term performance with shareholder interests. Plan D operates at the discretion of the Board. Participation in the Plan D is through an annual invitation. The Plan D Guidelines forms part of, and is incorporated by reference into, the terms of the Invitation. To the extent of any inconsistency between the terms of the Invitation and the Plan D Guidelines and the Performance Rights Plan Rules, the terms of the Invitation will prevail to the extent of the inconsistency. Plan D Base Award is calculated by multiplying the TFR at the commencement of the Performance Period (i.e. 1 July) by the Plan D participating percentage (as outlined in the invitation letter). Awards under the Plan D are offered in the form of Performance Rights. A Performance Right is a Right to one Share subject to satisfaction of the performance conditions and other terms set out in the Plan D Guidelines and the PRPR. The number of Performance Rights granted is based on the Plan D Base Award ($ value) divided by the VWAP of Company Shares traded on the ASX over the first five trading days of the performance period. The VWAP is set out in the invitation letter. Subject to the achievement of the relevant performance conditions, at the end of the performance period, some or all the Performance Rights may vest and convert to Shares. The number of Performance Rights that vest is based on the achievement of the Plan D performance measures. The Plan D performance measures include a XX% weighting on rTSR and XX% weighting on specific strategic measures. Performance Rights related to the achievement of the Plan D targets will vest and exercise to Shares with no further performance conditions. Unvested Performance Rights will lapse. Unvested Performance Rights remain subject to performance conditions and are not eligible to receive dividends. Plan E Plan E is A Co's equity-based retention plan. It forms part of the strategy adopted to support the retention of key individuals who have been identified by A Co or any of its wholly-owned subsidiaries as critical to the delivery of current and future business outcomes. Participation in the Plan E is by invitation only and determined at the sole discretion of the Company. To the extent of any inconsistency between the terms of the invitation and the Plan E Guide and the PRPR, the terms of the Invitation will prevail to the extent of the inconsistency. Awards granted under the Plan E are in the form of Performance Rights. The number of Performance Rights to be awarded to the Participant is set out in the invitation letter. The award will vest in tranches throughout the retention period. The vesting schedule (which includes the weighting and vesting date of each tranche) is set out in the invitation letter. A Performance Right is a right to one fully paid ordinary share in the Company subject to satisfaction of the performance conditions, other terms set out in the Plan E Guidelines and the PRPR. Regardless of the outcomes of the above performance conditions and any other vesting conditions, the Board may, in its absolute discretion, determine that vesting of some or all of the Performance Rights is not justifiable or supportable, in which case the Board may determine that some or all of the Performance Rights that would otherwise have vested will not vest and will instead lapse. Unvested Performance Rights remain subject to performance conditions and are not eligible to receive dividends. Plan F Plan F recognises the exceptional contribution of the highest performing employees across the business who, through their actions and behaviours, have significantly contributed to the annual objectives of A Co and have exceeded all expectations, such that they have had a significant impact on A Co's results over the performance year. Plan F operates at the absolute discretion of the Board and participation in the Plan F is not guaranteed as part of employment conditions. The invitation to participate in the Plan F will be issued on terms consistent with Plan F Guide and the PRPR. To the extent of any inconsistency between the terms of the invitation, the Plan F Guide and the PRPR, the terms of the invitation will prevail. The Plan F is awarded as Vested Rights with a mandatory X-month Non-Disposal Period and a X-month Forfeiture condition. This means that the right to the Shares will be Forfeited if the Participant leave within X months of the Date of Award. The number of Vested Rights granted to the Participant will be determined at the absolute discretion of the Board, with reference to the extent to which the Participant have exceeded relevant objectives. The number of Vested Rights that will be awarded to the Participant will be set out in an award letter. Each Vested Right entitles the holder to one fully paid ordinary share in the Company, subject to the PRPR and the other terms set out in the Plan F Guide. Vested Rights will only become Shares when the Participant exercises the Vested Rights. Vested Rights exercised during the Non-Disposal Period will be awarded as Restricted Shares that cannot be sold until the Non-Disposal Period ends. Vested Rights that have not been exercised during the X-month Non-Disposal Period will be automatically exercised at the end of the period. Salary Sacrifice Plan G Eligible participants to the Salary Sacrifice Plan G (Plan G) are all permanent full-time or part-time employee of A Co at the time of Offer as well as fixed term employees whose term of employment is for a period of 12 months or more, still an employee of A Co as at the Acquisition Date and Australian resident for tax purposes. Under the Plan G, employees are to: • nominate between AUD $XXXX and $XXXX per annum of their pre-tax salary to be salary sacrificed to acquire shares (Salary Sacrifice Share) in A Co (deducted each monthly pay in X equal amounts); • elect the non-disposal and income tax deferral period (between X and XX years). The Plan G Shares will be subject to a holding condition during which the Plan G Shares cannot be sold or transferred. The Plan G Shares will be released to the Participant following the end of the holding condition (or sooner in special circumstances such as cessation of employment). Each Participant's Salary Sacrifice contribution under the Plan G will be made from the Participant's Remuneration prior to the deduction of any applicable income tax from that Remuneration. The Plan G provides that the Plan G is a scheme to which Subdivision 83A-C of the ITAA 1997 applies (subject to the conditions in the ITAA 1997). Each month, within X working days of the salary contribution, Shares in A Co will be acquired on the Participant's behalf by the Plan Trustee. The salary contribution will be used to acquire Shares on market or new issue Shares will be allocated to the Participant, the number of Shares acquired on the Participant's behalf will be rounded down to the nearest whole Share. All Participant Shares issued, transferred or allocated to the Trustee to be held on behalf of a Participant under the Plan will rank pari passu in all respects with the Shares on issue except for any rights attaching to the Shares by reference to a record date prior to the date of their allotment, transfer or allocation, and subject to any restrictions on transfer applicable under these Rules or the Invitation. Subject to the terms of the Trust Deed and Invitation, where the Trustee holds Participant Shares on behalf of a Participant, the dividends payable on those Participant Shares will be paid by the Company to the Trustee, and the Trustee will pay any such dividends to the Participant as soon as reasonably practicable after those dividends are paid by the Company to the Trustee. To the extent of any inconsistency, the terms and conditions advised to an Eligible Person by the Board in an Invitation will prevail over any other provision of the rules in the Plan G. Salary Sacrifice Plan H Plan H supports NEDs to build their shareholdings in A Co and acts as a means of aligning the interests of NEDs and shareholders. A Participant to the NED SSSRP is a NED of A Co at the date on which the Plan Trustee acquires the Shares on the Participant's behalf and an Australian resident for tax purposes. Under the Plan H, NEDs can salary sacrifice a portion, or all, of the Director's Fees to acquire Vested Rights by nominating an amount to be deducted from the Director's Fees as an ongoing contribution from each monthly payment of Director's Fee in equal amounts. Vested Rights will be granted in XXX and XXX each year following the release of half and full year results. The Shares acquired under the Plan will be held by the Plan Trustee in accordance with the Trust Deed until the Participant choose to exercise the Vested Rights (at which point the Participant will acquire the Shares). Once granted, Vested Rights may be exercised at any time (up to XX years from the date of grant). The Plan Trustee must comply with the terms of the Trust Deed. Any entitlement to Vested Rights is contingent on the Participant remaining engaged by A Co on the grant dates. The number of Vested Rights granted will be determined by dividing the contribution from the Director's Fees by the value per Vested Right which was the VWAP of Shares purchased on market (at the applicable market price) at the time of grant. The Vested Rights do not carry any voting rights until they are exercised into Shares. Once the Vested Rights are exercised into Shares, the Participant will be able to exercise voting rights in respect of the Shares. In the event that the Participant ceases to be a NED, all Vested Rights will be automatically exercised, and Shares will be allocated to the Participant. Any Holding Lock will be lifted on the day that the Participant cease to be a NED. The Trust The Trust was established for the sole purpose of obtaining Shares for the benefit of Participants, including subscribing for or acquiring, allocating, holding and delivering Shares under various employee equity plans for the benefit of Participants. If there is any inconsistency between the Deed, the Plan Rules or the Terms of Participation, the Trust Deed shall prevail to the extent of any such inconsistency. Nothing in the Trust Deed confers or is intended to confer on the Company any charge, lien or any other proprietary right or proprietary interest in the Shares acquired by the Trustee in accordance with the Trust Deed. A Co does not have any beneficial interest in the Trust Assets, other than in respect of the Trustee's right of indemnity. Upon Termination of Trust, if there are any Trust Assets remaining, the Trustee must not pay any balance to any member of the Group. Trust Share means a Share which is held by the Trustee in accordance with the terms of the Trust Deed and includes any bonus shares 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. The Trustee declares and agrees that each Participant is, subject to the relevant Plan Rules and relevant Terms of Participation: • the beneficial owner of the Trust Shares held by the Trustee on their behalf, and • absolutely entitled to all other benefits and privileges attached to, or resulting from holding, those Trust Shares, and • it will deal with Trust Shares and any Trust Assets in respect of Trust Shares in accordance with the directions of the Company in accordance with the terms of the Trust Deed, and subject to any inconsistency with the terms of the Trust Deed, the directions of the relevant Participant, the terms of the relevant Plan Rules, and/or the relevant Terms of Participation, except where it would be required to incur a cost, expense or liability in so doing for which it is not fully indemnified. The Trustee's activities are limited to managing employee share schemes (as that term is defined in section 1100L(1) of the Corporations Act ) of A Co. Trustee's general powers The Trustee in its reasonable discretion has the full power to do all things a trustee is permitted to do by law in respect of the Trust, the Trust Shares and the Trust Assets, including the following: • to 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; • to subscribe for, purchase or otherwise acquire Trust Assets, Shares, rights or privileges 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; • to sell or otherwise dispose of Trust Assets, shares, rights or privileges 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; • to receive dividends or distributions on the Trust Shares and to apply those amounts in accordance with this Deed; • to sell or transfer the Trust Shares to the Participant and apply the proceeds of sale in accordance with this Deed and the relevant Plan Rules and relevant Terms of Participation; • to pay an Accumulated Dividend Payment to the relevant Participant as soon as reasonably practicable following the Participant's exercise of its Vested Rights and the issue, transfer or allocation to the Participant of Shares; • to sell any rights relating to the Shares and apply the proceeds of sale in accordance with the Trust Deed; • 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; • to do 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. The Trustee agrees: • the Trust will be managed and administered so that it satisfies the definition of 'employee share trust' for the purposes of section 130-85(4) of the ITAA 1997 • the Trustee acknowledges and agrees that, in its capacity as trustee of the Trust, its activities are limited to managing employee share schemes (as that term is defined in section 110L(1) of the Corporations Act) of the Company. The key operating terms of the Trust are set out below: • the Trust will be funded by contributions from A Co and Employer Entities (i.e. for the purchase of shares in accordance with the Plans). • upon receiving the notice and sufficient payment or having sufficient capital as required by that notice, the Trustee must within X days (or other period as the Board determines), purchase the requisite number of Shares on market or off market on behalf of the relevant Participant(s) or Participants generally. • shares acquired by the Trustee must be allocated to the relevant employees and held on their behalf as soon as reasonably practicable where required to do so, or permitted, by the relevant Plan Rules. • the structure of the Trust and the Plans are such that Shares may be dealt with at any time after the Restrictive Period lapses, in the following manner: ­ ated to each Participant will generally be transferred into the name of the Participant (i.e. legal title) upon a Withdrawal Notice being lodged with and approved by the Board; or ­ rustee can sell shares on behalf of the Participant, where permitted to do so by the Participant, resulting in a cashless exercise for them. That is, the Participant receives proceeds on sale of shares by the Trust less the exercise price (if any) and any brokerage costs. • the following applies to Unallocated Trust Shares: ­ rustee must not exercise any voting rights in relation to Unallocated Trust Shares. ­ rustee may apply any capital receipts, dividends or other distributions received in respect of Unallocated Trust Shares to: • purchase further Shares to be held on trust for the purposes of this Trust; and/or • pay an Accumulated Dividend Payment to the relevant Participant as soon as reasonably practicable following the Participant's exercise of its Vested Rights and the issue, transfer or allocation to the Participant of Shares. ­ rustee must not participate in any Rights Issues in respect of Unallocated Trust Shares. ­ rustee must hold any bonus shares issued in respect of the Unallocated Trust Share on trust for the purposes of this Deed; and ­ rustee must keep an account of all Unallocated Trust Shares acquired by the Trustee that are held as Trust Assets. ­ ompany may direct the Trustee to allocate Unallocated Trust Shares to a Participant from time to time. Following the allocation to a Participant of Trust Shares held by the Trustee in accordance with this Deed, the Company may direct the Trustee to continue to hold those Trust Shares on behalf of the Participant and on the terms of this Deed. • The following applies to Forfeited Shares: ­ s discretion, the Board may from time to time by notice in writing direct the Trustee to hold or reallocate any Forfeited Shares (or the proceeds of sale of such Forfeited Shares) for the benefit of one or more Participants; or for the benefit of any of the Plans. ­ rustee may, in consultation with the company, apply any dividends, bonus shares or other benefits received by the Trustee in respect of any Forfeited Shares or any proceeds of sale of any Forfeited Shares for any permitted activity under subsection 130-85(4) of the ITAA 1997. In the event the Trust is terminated, if there are any Trust Assets remaining in the Trust following distribution to Participants of any Trust Shares and any Net Income attributable to Participants or application of Trust capital, those Trust Assets must be applied in whole or in part for the benefit of one or more of the following beneficiaries as the Trustee thinks fit: • an employee share or option trust established and maintained for the benefit of all or any employees of the Group; • a superannuation fund sponsored by the Company; or • any charity nominated by the Trustee. The Trustee must not pay any balance of the remaining Trust Assets to any member of the Group. The Trustee is not entitled to receive from the Trust any fees, commission or remuneration in respect of its performance of its obligations as trustee of the Trust. The Company may pay to the Trustee from the Company's own resources any fees, commission or remuneration and reimburse any expenses incurred by the Trustee as the Company and the Trustee may agree from time to time. The Trustee is entitled to retain for its own benefit any such remuneration or reimbursement. To the extent permitted by law, the Company indemnifies the Trustee: • Information supplied The Company must provide to the Trustee all necessary funds required by the Trustee to pay for liabilities, fees, costs and expenses incurred by the Trustee in the establishment, maintenance or administration of the trusts declared in this Deed and any liability for any Tax in relation to any Trust Shares held by the Trustee, or any costs in relation to the Trust. Other A Co has an internal policy of ensuring that the Trust has coverage of no less than XX% of the Vested Rights currently held by A Co employees. A Co does not intend, at this stage, to hold more shares in the Trust than required to settle obligations arising from the Plans. A Co will incur various costs in relation to the implementation and on-going administration of the Trust. For example, A Co will incur costs associated with the services provided by the Trustee, including but not limited to: • employee plan record keeping • production and dispatch of holding statements to employees • provision of annual income tax return information for employees • costs incurred in the acquisition of shares on market (e.g., brokerage costs and the allocation of such shares to participants) • management of employee termination • other trustee expenses such as the annual audit of the financial statements and annual income tax return of the Trust • services provided by A Co's accounting and legal advisors (however, the ongoing legal and advisory fees do not involve fees incurred to amend the Trust Deed and Plan rules). For the period from XX XXX 20XX to XX XXX 20XX, in respect of the Trust Deed (as amended and restated by the Second Amendment and Restatement Deed), the following clauses were not exercised by the Trustee. • Information supplied The X Amendment and Restatement Deed for the Trust Deed was executed on XX XXX 20XX. With effect from the date of the execution of the Amendment and Restatement Deed, the above clauses have been amended or deleted.

Relevant legislative provisions: 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 | 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 subparagraph 83A-105(4)(a)(i) | Income Tax Assessment Act 1997 section 83A-210 | Income Tax Assessment Act 1997 paragraph 83A-210(a) | Income Tax Assessment Act 1997 subparagraph 83A-210(a)(i) | 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 Division 165 | Income Tax Assessment Act 1997 section 701-1 | Income Tax Assessment Act 1997 section 974 75 | Fringe Benefits Tax Assessment Act 1986 section 66 | Fringe Benefits Tax Assessment Act 1986 section 67 | Fringe Benefits Tax Assessment Act 1986 subsection 136(1) | Fringe Benefits Tax Assessment Act 1986 paragraph 136(1)(f)

Reasons for decision: Summary: Unless otherwise stated, all legislative references are to the provisions of the Income Tax Assessment Act 1997 (ITAA 1997). | Detailed Reasoning - Questions 1 to 5 - application of the single entity rule in section 701-1: The consolidation provisions of the ITAA 1997 allow certain groups of entities to be treated as a single entity for income tax purposes. Under the single entity rule ( SER ) in section 701-1, the subsidiary members of an income tax consolidated group are taken to be parts of the head company. The meaning and application of the SER is explained in Taxation Ruling TR 2004/11 Income tax: consolidation: the meaning and application of the single entity rule in Part 3-90 of the Income Tax Assessment Act 1997 . As a consequence of the SER, the actions and transactions of the subsidiary members of the A TCG are treated, for income tax purposes, as having been undertaken by A Co, as the head company of the A TCG. | Detailed Reasoning - Questions 6, 7 and 8: The SER in section 701-1 has no application to the FBTAA. The Commissioner has therefore provided a ruling to A Co and each employing company in the A TCG in relation to questions 6, 7 and 8. | Detailed Reasoning - Issue 1: Income Tax | Summary: A Co as head company of the A TCG will obtain an income tax deduction, pursuant to section 8-1 in respect of the irretrievable cash contributions made by A Co to the Trustee to fund the subscription for or acquisition on-market of A Co shares by the Trust for the purpose of the PRPs, ESSP or the NED SSSRP. | Detailed Reasoning - Detailed reasoning: Subsection 8-1(1) allows taxpayer to deduct from the assessable income any loss or outgoing to the extent that it is incurred in gaining or producing assessable income or is necessarily incurred in carrying on a business for the purpose of gaining or producing the assessable income. However, under subsection 8-1(2), a loss or outgoing is not deductible to the extent that it is a loss or outgoing of capital, or of a capital nature. A Co is an Australian resident public company and carries on diverse businesses for the purpose of gaining or producing assessable income. A Co operates an employee share scheme as part of its employee remuneration strategy. Under the Plans, A Co grants Performance Rights, and Vested Rights and Shares to Participants and makes irretrievable cash contributions to the Trustee to fund the acquisition of A Co Shares by the Trust for allocation to Participants (in accordance with the Plans and the Trust Deed). Under the Trust Deed, A Co must provide the Trustee with all of the funds required to enable the Trustee to subscribe for, or acquire, A Co Shares. | Detailed Reasoning - 'Incurred' in gaining or producing assessable income or in carrying on a business: The cash contributions made by A Co to the Trustee are irretrievable and non-refundable in accordance with the Trust Deed as: • all funds received by the Trustee from A Co will constitute accretions to the corpus of the Trust and will not be repayable to A Co, other than as consideration for A Co Shares subscribed for by the Trustee in accordance with the Trust Deed and the Plans or relevant terms of participation • all funds received by the Trustee from the A Co will not be repaid to A Co, and • neither A Co nor any member of the A TCG is a beneficiary of the Trust. It is accepted that the irretrievable cash contributions made by A Co to satisfy Performance Rights, Vested Rights and Shares granted to Participants under the Plans are incurred for the purposes of section 8-1. However, what makes the outgoing deductible under section 8-1 is the existence of a sufficient connection, a 'link' or 'nexus', between the loss or outgoing and the production of the taxpayer's assessable income. A taxpayer's subjective purpose in incurring a loss or outgoing is not normally relevant to whether a sufficient connection exists. To the extent the irretrievable cash contributions relate to funding the provision of A Co Shares to Participants under the Plans who are employees of the A TCG, it is accepted that these expenses are productive of A Co's assessable income and are incidental and relevant to the income earning activity of the A TCG as: • they arise as part of the remuneration arrangements for employees of the A TCG, and • the irretrievable cash contributions to the Trust are part of an ongoing series of payments in the nature of the remuneration of those employees. • That is, there is sufficient nexus between: • the irretrievable cash contributions made by A Co to the Trustee to satisfy the granting of Performance Rights, Vested Rights and Shares under the Plans to Participants who are employees of the A TCG, and • its own income earning activities, where those employees engage in activities that derive income assessable in Australia. In determining whether those irretrievable cash contributions are otherwise necessarily incurred in carrying on a business, the expense must have been incurred 'in the carrying on' of the business. It must be part of the cost of the trading operations of that business. What is required is that the expenditure be appropriate and adapted for the ends of the business carried on. The irretrievable cash contributions made by A Co to the Trust directly relate to employees of the A TCG, as those contributions form part of the company's employee remuneration strategy to remunerate its employees with equity instruments in A Co. Such expenditure is considered to be appropriate and adapted for the ends of the business being carried on by the A TCG. | Detailed Reasoning - Not capital or of a capital nature: The costs incurred by A Co will be an outgoing for the periodic funding of an employee share acquisition plan for the employees of the A TCG. Costs incurred are in relation to more than one grant of ESS interests, and A Co intends to continue satisfying those ESS interests using the A Co Shares acquired by the Trust. This indicates that the irretrievable cash contributions to the Trust are ongoing in nature and are part of A Co's broader remuneration expenditure. While the irretrievable cash contributions may be viewed to secure and enduring or lasting benefit for A Co that is independent of the year-to-year benefits that it derives from a loyal and contented workforce, that enduring benefit is not considered to have a lasting quality as the irretrievable cash contributions which form the Trust's funds is permanently dissipated within a relatively short period of the irretrievable cash contributions being made. Therefore, the payments are not capital, or of a capital nature, and paragraph 8-1(2)(a) is not satisfied. | Detailed Reasoning - Conclusion: Subject to the operation of section 83A-210, A Co will be entitled to deduct an amount under section 8-1 for irretrievable cash contributions it makes to the Trustee to acquire A Co Shares to satisfy Performance Rights, Vested Rights and Shares granted under the Plans for the benefit of the employees of the A TCG that engage in activities which derive assessable income in Australia. | Summary: A Co as head company of the A TCG will obtain an income tax deduction, pursuant to section 8-1, in respect of costs incurred by A Co or any subsidiary member of the A TCG in relation to the ongoing administration of the Trust including expenses relating to preparation of tax returns and obtaining tax advice for the Trust. | Detailed Reasoning - Detailed reasoning: As discussed under Question 1, section 8-1 allows a deduction for all losses and outgoings to the extent they are necessarily incurred in carrying on a business for the purpose of gaining or producing the taxpayer's assessable income, except where the outgoings are of a capital nature. A Co carries on a business of producing assessable income and A Co operates an employee share scheme as part of its remuneration strategy. Under clause X.x, clause X.x and clause XX of the Trust Deed, A Co will: • pay to the Trustee from A Co's own resources any fees, commission or remuneration and reimburse any expenses incurred by the Trustee as agreed from time to time; • pay all the costs and expenses incurred by the Trustee in performing its obligations or in the execution or purported execution of any of its powers, authorities or discretions as trustee of the Trust; • pay all the liability, fees, costs and expenses incurred in the establishment, maintenance or administration of the Trust declared in the Trust Deed and any liability for any Tax in relation to any Trust Shares held by the Trustee or any costs in relation to the Trust. A Co will incur costs associated with the services provided by the Trustee, including but not limited to: • employee plan record keeping; • production and dispatch of holding statements to employees; • provision of annual income tax return information for employees; • costs incurred in the acquisition of shares on market (e.g., brokerage costs and the allocation of such shares to participants); • management of employee termination; • other trustee expenses such as the annual audit of the financial statements and annual income tax return of the Trust; and • services provided by A Co's accounting and legal advisors (however, the ongoing legal and advisory fees do not involve fees incurred to amend the Trust Deed and Plan rules). These costs are regular and recurrent expenses and are necessarily incurred by A Co in administering the employee share scheme while carrying on its business for the purpose of gaining or producing its assessable income. Therefore, these costs are not capital in nature. Accordingly, A Co will be entitled to deduct an amount under section 8-1 in respect of the costs incurred in relation to the on-going administration of the Trust, to the extent those costs relate to the Participants who are employees of members of the A TCG. This view is consistent with Tax Determination TD 2022/8 Income tax: deductibility of expenses incurred in establishing and administering an 'employee share scheme. For completeness, any costs incurred by A Co to amend the Trust Deed and Plan rules are not deductible under section 8-1 because these costs are of a capital nature, consistent with TD 2022/8. | Summary: The irretrievable cash contributions made by A Co to the Trustee, to fund the subscription for or acquisition on-market of A Co Shares by the Trust, will be deductible to A Co at a time determined by section 83A-210 where contributions are made before the acquisition of the relevant ESS interests. The effect is that A Co must delay the deduction of the irretrievable cash contributions until the Participant acquires the relevant ESS interests. For completeness, provided the irretrievable cash contributions are made at or after the time the relevant Performance Right, Vested Right or Share is acquired by the Participant, those irretrievable cash contributions are deductible by A Co under section 8-1 in the income year in which they are made to the Trustee. | Detailed Reasoning - Detailed reasoning: The deduction for the irretrievable cash contributions under section 8-1 is generally allowable in the income year in which a taxpayer incurs the outgoing. However, section 83A-210 modifies this rule in certain circumstances in respect of contributions provided by an employer to a trust to purchase shares under an employee share scheme. The effect of section 83A-210 is to deem the time an employer incurs the outgoing to be the time the relevant ESS interest is acquired by a beneficiary, rather than the time the employer makes the irretrievable cash contribution to the trust, if the irretrievable cash contribution is made before the relevant 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 . Section 83A-210 will only apply if there is a relevant connection between the money provided to the trustee and the acquisition of ESS interests (directly or indirectly) by the employee under an employee share scheme 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 a company or a right to acquire a beneficial interest in a share in the company. A Performance Right or Salary Sacrifice Share granted to a Participant under the Plans will be an ESS interest (as defined in subsection 83A-10(1)). The Plans are considered to be an employee share scheme (as defined in subsection 83A-10(2)) under which employees of A Co, in relation to their employment, are either provided with a: • beneficial interest in A Co Shares (paragraph 83A-10(1)(a)), or • beneficial interest in rights to acquire a beneficial interest in A Co Shares (paragraph 83A-10(1)(b)). The employee share scheme contains a number of interrelated components which include the provision of irretrievable cash contributions by A Co to the Trustee to acquire shares in A Co. These irretrievable cash contributions enable the Participants (each an 'ultimate beneficiary' as defined in paragraph 83A-210(a)) to acquire, directly or indirectly, an ESS interest under the employee share scheme (the Plans) in relation to their employment. If the irretrievable cash contributions are made by A Co to the Trustee before the time the Participants acquire the relevant ESS interests, the deduction for the irretrievable cash contributions, to the extent they relate to the employees of the A TCG, is allowable to A Co in the income year when the relevant ESS interest is acquired by the Participant under the Plans. For completeness, the deduction for the irretrievable cash contributions is not allowable to A Co before the time the Participants acquire the relevant ESS interests where the contributions are used to purchase shares in excess of Performance Rights and Salary Sacrifice Shares granted under the Plans. | Summary: If the Trust satisfies its obligation under the PRPs, ESSSP or the NED SSSRP by subscribing for new shares in A Co, the subscription proceeds will not be included in the assessable income of A Co under section 6-5 or section 20-20 or trigger a capital gains tax (CGT) event under Division 104. | Detailed Reasoning - Ordinary income under section 6-5: Section 6-5 provides that taxpayer's assessable income includes income according to ordinary concepts which is called ordinary income. Receipts of a capital nature do not constitute income according to ordinary concepts, whether or not incurred in carrying on a business. Receipts of a capital nature do not constitute income according to ordinary concepts, whether or not received in the course of carrying on a business. In G .P. International Pipecoaters Proprietary Limited v The Commissioner of Taxation of the Commonwealth of Australia (1990) 170 CLR 124, the High Court of Australia held that whether a receipt is income or capital depends on its objective character in the hands of the recipient. Brennan, Dawson, Toohey, Gaudron and McHugh JJ stated at page 138 that: To determine whether a receipt is of an income or of a capital nature, various factors may be relevant. Sometimes, the character of receipts will be revealed most clearly by their periodicity, regularity or recurrence; sometimes, by the character of a right or thing disposed of in exchange for the receipt; sometimes, by the scope of the transaction, venture or business in or by reason of which money is received and by the recipient's purpose in engaging in the transaction, venture or business. In an employee share scheme, where the trustee subscribes to the company for an issue of shares and pays the full subscription price for the shares, the company receives an irretrievable cash contribution to its share capital from the trustee. The character of the subscription proceeds received by the company from the trustee can be determined by the character of the right or thing disposed of in exchange. As A Co issues the Trustee with new shares in itself in exchange for the subscription proceeds, the character of the newly issued shares is one of capital. Therefore, the receipt of the subscription proceeds takes the character of share capital and is of a capital nature. When A Co receives subscription proceeds from the Trustee where the Trustee has subscribed for new A Co Shares to satisfy obligations to Participants under the Plans, the subscription proceeds received by A Co from the Trustee are a capital receipt and will not be treated as ordinary income under section 6-5. | Detailed Reasoning - Assessable recoupment under section 20-20: Subsection 20-20(2) provides that if you receive an amount as a recoupment of a loss or outgoing, it will be assessable income if you received it by way of insurance or indemnity and that amount can be deducted as a loss or outgoing in the current year or earlier income year. A Co will receive an amount for the subscription of the Shares from the Trustee. There is no insurance contract in this case, so the amount is not received by way of insurance. Further, the amount is not an indemnity because the receipt does not arise under a statutory or contractual right of indemnity, and the receipt is not in the nature of compensation. [1] Therefore, the receipt of the subscription proceeds does not constitute an assessable recoupment under subsection 20-20(2). Subsection 20-20(3) provides that an amount received by you as a recoupment of a loss or outgoing (except by way of insurance or indemnity) is an assessable recoupment if you can deduct the loss or outgoing in the current or an earlier income year because of a provision listed in the table in section 20-30. 'Recoupment' is defined in subsection 20-25(1) as including any kind of recoupment, reimbursement, refund, insurance, indemnity or recovery, however described and a grant in respect of the loss or outgoing. None of the provisions listed in section 20-30 are relevant to the current circumstances. Therefore, the subscription amount does not constitute an assessable recoupment under subsection 20-20(3). Therefore, the subscription proceeds will not be an assessable recoupment under section 20-20. | Detailed Reasoning - Capital gains tax under Division 104: Section 102-20 provides that a capital gain or a capital loss is made if and only if a CGT event happens. CGT events for which you can make a gain or loss are specified in Division 104. The CGT events that may have possible application to the receipt of the subscription proceeds received by A Co from the Trustee of the Trust are CGT event D1 (creating contractual or other rights) and CGT event H2 (receipt for event relating to a CGT asset). Paragraphs 104-35(5)(c) and 104-155(5)(c) respectively provide that CGT event D1 and CGT event H2 do not happen if a company issues or allots equity interests or non-equity shares in the company. As A Co issues shares to the Trustee and the shares constitute equity interests under section 974-75, neither CGT event D1 nor CGT event H2 happen. As no CGT event happens, the subscription amount will not be assessable as a capital gain to A Co. | Summary: The Commissioner will not seek to make a determination that Part IVA of the ITAA 1936 applies to deny, in part or full, any deduction claimed by A Co as head company of the tax consolidated group in respect of the irretrievable cash contributions made by A Co or any subsidiary member of the A TCG to the Trustee to fund the subscription for or acquisition on-market of A Co shares by the Trust. | Detailed Reasoning - Detailed reasoning: Part IVA 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 of the ITAA 1936, 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 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 paragraph 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 A Co to obtain a tax benefit. | Detailed Reasoning - Issue 2: Fringe Benefits Tax | Summary: The provision of Performance Rights, Salary Sacrifice Shares or Vested Rights by A Co or A Co Employer Entities to employees of A Co under the PRPs, ESSP or the NED SSSRP will not be a fringe benefit within the meaning of subsection 136(1) of the FBTAA 1986. | Detailed Reasoning - Detailed reasoning: An employer's liability to fringe benefits tax 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 'fringe benefit' definition. One benefit excluded from being a 'fringe benefit', pursuant to paragraph (h) of subsection 136(1) of the FBTAA 1986, is: (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; The Commissioner accepts that the Plans are an employee share scheme under subsection 83A-10(2) as the Performance Rights and Salary Sacrificed Shares to be granted under the PRPs, the ESSSP and the NED SSSRP respectively will be acquired at a discount and in connection with employment by A Co (or the Employer Entities). The Commissioner accepts that the Performance Rights, Vested Rights and Salary Sacrifice Shares granted under the Plans constitute 'ESS interests' (as defined under subsection 83A-10(1)) to which Division 83A applies as they are acquired by Participants at a discount. In particular Subdivision 83A-B or 83A-C will apply to the schemes such that the discount will be included in the employee's assessable income either upfront or at the deferred taxing point. Accordingly, the provision of Performance Rights, Vested Rights and Shares to employees of A Co under the Plans will not constitute a 'fringe benefit' by virtue of paragraph (h) of the definition of fringe benefit in subsection 136(1) of the FBTAA 1986. In addition, when Performance Rights are later vested and exercised, it will not give rise to a fringe benefit as any benefit received would be in respect of the exercise of the Performance Right and not in respect of employment (refer to ATO Interpretative Decision ATO ID 2010/219 Fringe benefits tax fringe benefit: shares provided to employees upon the exercise of rights granted under an employee share scheme ). Therefore, the provision of Shares in satisfaction of Performance Rights will also not be a fringe benefit. | Summary: The irretrievable cash contributions made by A Co or any subsidiary of A Co to the Trustee, to fund the subscription for or acquisition on-market of A Co Shares, will not be treated as a fringe benefit within the meaning of section 136(1) of the FBTAA 1986. | Detailed Reasoning - Detailed reasoning: An employer's liability to fringe benefit taxes 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. One benefit excluded from being a fringe benefit pursuant to paragraph (ha) of the 'fringe benefit' definition in subsection 136(1) of the FBTAA 1986 is: (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 A Co Employee Share Trust must be an employee share trust as defined in subsection 130-85(4). In examining whether the requirements of subsection 130-85(4) are met, it is the activities of the trustee in relation to a particular trust that are relevant. To qualify as an employee share trust, a trustee's activities must be limited to: • obtaining shares or rights in a company (paragraph 130-85(4)(a)) • ensuring that ESS interests in the company that are beneficial interests in those shares or rights are provided under an ESS to employees, or associates of employees, of the company or a subsidiary of the company (paragraph 130-85(4)(b)) • other activities that are merely incidental to the activities mentioned in paragraphs 130-85(4)(a) and (b) (paragraph 130-85(a)(c)). Paragraphs 130-85(4)(a) and (b) are satisfied because: • the Trustee acquires shares in A Co • as stated above, we accept that the Plans comprise an employee share scheme under which ESS interests are provided to Participants • the Trustee ensures that ESS interests (as defined in subsection 83A-10(1)) are provided under an employee share scheme (as defined in subsection 83A-10(2)) by allocating Shares to Participants in accordance with the Trust Deed and the rules of the 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(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'. Our 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'? . Activities that involve 'investing in assets other than shares or rights to shares, in the employer company' or result in employees being provided with additional benefits (such as the provision in financial assistance, including a loan to acquire the shares) are not considered to be merely incidental. In the present case, the activities that the Trustee is permitted to undertake under the Trust Deed are indicative of those required to administer an employee share trust and are incidental to the primary purposes stated in paragraphs 130-85(4)(a) and (b). Therefore, the irretrievable cash contribution made by A Co to the Trustee, to fund the subscription for or acquisition on-market of A Co Shares, will not constitute a 'fringe benefit' by virtue of paragraph (ha) of the definition of fringe benefit in subsection 136(1) of the FBTAA 1986. | Summary: The Commissioner will not seek to make a determination that section 67 of the FBTAA 1986 applies to increase the fringe benefits taxable amount to A Co or any subsidiary of A Co, by the amount of tax benefits gained from irretrievable cash contributions made by A Co to the Trustee, to fund the subscription for or acquisition on-market of A Co Shares. | Detailed Reasoning - Detailed reasoning: Section 67 of the FBTAA 1986 is a general anti-avoidance provision of the FBTAA 1986. Subsection 67(1) of the FBTAA 1986 is satisfied where a person, or one of the persons who entered into or carried out an arrangement or part of an arrangement under which a benefit is or was provided to a person, did so for the sole or dominant purpose of enabling an eligible employer, or the eligible employer and another employer, to obtain a tax benefit. The Commissioner will only make a determination under section 67 of the FBTAA 1986 if the arrangement resulted in the payment of less FBT than would be payable but for entering into the arrangement. As discussed in the answer to Question 6, without the provision of a 'fringe benefit', no amount will be subject to FBT. The irretrievable cash contributions made by A Co to the Trustee (pursuant to the Trust Deed) will not be a fringe benefit within the meaning of subsection 136(1) of the FBTAA 1986 for the reasons outlined in response to question 7. As these benefits have been excluded from the definition of a fringe benefit, the FBT liability is not any less than it would have been but for the arrangement. Therefore, the Commissioner will not make a determination that section 67 of the FBTAA 1986 applies to increase the fringe benefits taxable amount to A Co by the amount of tax benefit gained from irretrievable cash contributions, made by A Co to the Trustee, to fund the acquisition of A Co Shares pursuant to the Plans. [1] In the Private Ruling Application (p.36), A Co contended that the decision of Kitto J in FCT v Wade has often been referred to as authority for the meaning of the term "indemnity", confirming that the expression includes a receipt in the nature of compensation by way of statutory right as well as a receipt under a contract of indemnity.

Reasons for decision: These reasons for decision accompany the Notice of private ruling for A Co and others.