Private ruling: Employee share scheme
Date of advice: 10 June 2021
Published: August 2021

Ruling: Q1: Will Company A as head of the income tax consolidated group (the Group) 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 Company A to the Trustee of the Trust to fund the subscription for, or acquisition on-market of, Company A shares by the Trust pursuant to the Plans in respect of employees based in Australia (Participants)? | A1: Yes | Q2: To the extent the costs are not capital in nature, will Company A obtain an income tax deduction, pursuant to section 8-1 of the ITAA 1997, in respect of costs incurred in relation to the implementation and on-going administration of the Trust? | A2: Yes | Q3: Are irretrievable cash contributions made by Company A to the Trustee of the Trust funding the subscription for, or on-market acquisition, of Company A shares by the Trust under the Plan, deductible under section 8-1 of the ITAA 1997 to Company A at a time determined by section 83A-210 of the ITAA 1997 in respect of those Employee Share Scheme (ESS) interests which are subject to Division 83A of the ITAA 1997? | A3: Yes - to the extent that contributions are made before the acquisition of the relevant ESS interests. | Q4: 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 A as head company of the Group for the irretrievable cash contributions made to The Trustee of the Trust to fund the subscription for, or on-market acquisition, of Company A shares by the Trust, pursuant to the Plans? | A4: No | Q5: If the Trustee of the Trust satisfies its obligation under the Plan by subscribing for new shares in Company A, will the subscription proceeds be included in the assessable income of Company A under sections 6-5 or 20-20 of the ITAA 1997, or trigger a capital gains tax (CGT) event under Division 104 of the ITAA 1997? | A5: No | Q6: Will the provision of shares to participants under the Plan be a fringe benefit within the meaning of subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A6: No | Q7: Will the irretrievable cash contributions made by Company A or Group Companies to The Trustee of the Trust, to fund the subscription for, or on-market acquisition, of Company A shares by the Trust, be treated as a fringe benefit within the meaning of section 136(1) of the FBTAA? | A7: No | Q8: Will the Commissioner seek to make a determination that section 67 of the FBTAA applies to increase the aggregate fringe benefits amount of Company A or Group Companies by the amount of tax benefit gained from irretrievable cash contributions made by Company A or Group Companies to The Trustee of the Trust, to fund the subscription for, or acquisition on-market, of Company A shares? | A8: No The rulings for questions 1 to 4 inclusive each apply for the following periods: Income tax year ended 30 June 20XX Income tax year ended 30 June 20XX Income tax year ended 30 June 20XX Income tax year ended 30 June 20XX Income tax year ended 30 June 20XX The rulings for questions 5 to 8 inclusive each apply for the following periods: Fringe benefits tax year ended 31 March 20XX Fringe benefits tax year ended 31 March 20XX Fringe benefits tax year ended 31 March 20XX Fringe benefits tax year ended 31 March 20XX Fringe benefits tax year ended 31 March 20XX

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below, including the following documents, or relevant parts of them, which are to be read with the description. Employee Share Trust (the Trust) Deed provided to the Commissioner on 14 May 2021 (Trust Deed). The rules of the Company A Performance Rights Plan (PRP) provided to the Commissioner on 10 March 2021 and the rules of the initial Company A Performance Rights Plan (Initial Plan) on 14 May 2021 collectively known as the Plansorthe Company A Performance Rights Plans. Template offer letter for grants of Rights under the PRP provided to the Commissioner on 21 April 2021. Offer letters of Rights under the Initial Plan provided to the Commissioner on 21 April 2021. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. Company Background Company A (referred to also as the Company) was incorporated and is listed on the Australian Securities Exchange (ASX). Company A is the head company of an Income Tax Consolidated Group (the Group). The members of the Group are referred to below as Group Companies. The following are all members of the Group: Company A Company B Company C Company D Company E Company F Company G Company H Company I Company J Company K Company L Company M Company N Company O Company P Company Q Company R Company S Company T Company U Company V Company W Company A controls a number of management businesses. Company A's strategy is to be the leading service provider to clients in their business. It seeks to provide superior services to its clients. In order to achieve this, Company A relies on its quality workers. Consequently, a key focus of Company A is to attract, retain and motivate its employees. As part of listing on the ASX, Company A implemented a performance rights plan (Initial Plan) designed to align the interests of employees and shareholders. The first rights were issued under the Initial Plan, with the last rights issued under the Initial Plan expiring in 20XX. In order to continue facilitating the alignment of employees and shareholders beyond the term of the Initial Plan (which will cease once the Trust is implemented), Company A will implement the Performance Rights Plan (PRP), a subsequent performance rights plan with substantially similar terms to those of the Initial Plan. Performance Rights Plan (PRP) The PRP is part of Company A's broader remuneration strategy. The Board of Company A (the Board) intend to align the interests of employees and shareholders by providing an opportunity for the eligible participants to acquire an equity interest in Company A. The PRP broadly operates as follows: • The Company at the direction of the Board may offer performance rights to an eligible participant by giving the eligible participant an offer. • Eligible Participants defined in the Plan • Each right entitles the holder to subscribe for one fully paid ordinary share in the capital of the Company (Plan Shares). • Subject to exercising requirements in accordance with the Plan, on vesting the rights convert into shares and are transferred to the employee in accordance with the Trust Deed. • Vesting conditions will be determined by the Board for each offer of rights under the Plan. • Vesting conditions are applied based on the leadership category for the relevant employee and a calculation will be applied based on criteria relevant to their role and impact, along with an applicable vesting period. • A grant of rights does not confer any right or interest, whether legal or equitable in shares until all vesting conditions in respect of such rights have been satisfied or waived by the Board. • Rights which have not been exercised will expire and cease to exist on the first to occur of a. the relevant participant ceasing to be employed or engaged by the company or a related company; b. the rights being forfeited; and c. the fifth anniversary of the time of grant, unless the Board in its discretion has determined at the time of grant that another expiry date is to apply the right. • Forfeited rights shall cease to exist and no right may be exercised after it has been forfeited. • Company A will pay all costs and expenses in relation to the establishment and operation of the Plan, including all costs and expenses in relation to an issue, or purchase and transfer of shares to a participant including any brokerage, commission, stamp duty or other transaction. Employee Share Trust (the Trust) The Trust is to be established as a sole purpose trust to acquire, hold and transfer shares for the benefit of participants in the Plans. The Trust Deed states that the sole activities of the Trust will be managed and administered by the Trustee in accordance with the definition of Employee share trust (EST) for the purposes of subsection 130-85(4) of the ITAA 1997. The Trustee of the Trust will not be a member of the Group. The Trust is to be funded by cash contributions paid from Company A or Group Companies to the Trustee of the Trust for the acquisition of shares in accordance with the Trust Deed for the benefit of participants. All these contributions will be made by a member of the Company A tax consolidated group in cash to the trustee of the Trust. In particular, in the scenario where the Trustee is going to subscribe for shares from Company A directly after this contribution has been made, this will be a two-step process where the group member contributes cash to the Trustee of Trust and then the Trustee of the Trust uses this cash contribution to subscribe for shares in Company A. The Trustee must not use any contributions received for any purpose other than to acquire shares in the ordinary course of trading on the ASX or to subscribe for shares for participants as directed by the Board. The Trust Deed also specifically excludes the Trustee from repaying any contributions received to Company A or any Group Company. The Trust is to be used for various commercial benefits such as: • The subscription for, or on-market acquisition of shares by the Trust to satisfy rights under the Initial Plan and/or the Plan creates administrative difficulties for Company A as it is legally unable to acquire shares in itself. • As such, one of the main reasons for establishing the Trust is to provide greater flexibility to Company A in acquiring shares to satisfy rights. • These administrative efficiencies mean that the Trust facilitates, via an arm's-length mechanism, the ability of Company A to attract, retain and motivate employees, and to align the interests of such employees with those of shareholders. Broadly, the Trust operates as follows: • The Trustee is able to be appointed and removed as Company A sees fit. • Company A and Group Companies may make contributions of funds to the Trustee of the Trust to enable the Trust to acquire shares, or request that the Trustee apply capital of the Trust for the purpose of acquiring shares, in Company A. • Within 7 days of receiving a direction from the Board, the Trustee of the Trust must allocate shares to the account established for a participant. Importantly, the Trustee will be registered as the legal owner on acquisition of the shares, Company A or any of the Group Companies are not permitted to have any beneficial interest in the shares. • The Trustee will receive direction from Company A when it must allocate shares to a participant. Further, the Trustee must transfer or dispose of shares in accordance with the Plan Rules and any offer. Importantly, the Trustee must promptly (within 30 days) notify the participant of the shares being allocated to that participant's account. • Forfeiture of shares by a participant will result in the shares being held by the Trustee on an unallocated basis. The company by notice can direct the Trustee to reallocate the shares for the benefit of another participant, or to hold the proceeds of sale of any such shares in order to meet future obligations under the Plan. • At the direction of the relevant participant the Trustee can sell the shares that the participant is entitled to. The Trustee will apply the proceeds of sale first to disposal costs (including brokerage fees, commission, stamp duty or other transaction costs) and the balance to the participant. Additionally, the Trustee can deduct an amount to be paid to a participant for the purpose of tax payable on their behalf in relation to any shares held on behalf of the participant. • The Trustee must notify Company A when it transfers or allocates shares to a participant and must notify to company of the relevant details. • The participants are presently entitled to the net income which is attributable to Plan Shares, proceeds of sales of Plan Shares or other transactions relating to the Plan Shares, which are held by the Trustee on behalf of the participant. This is further detailed in the Trust Deed, which allows the Trustee to apply any income received by the Trustee in relation to Plan Shares held by the Trustee on behalf of the participant in the manner directed by the participant, or otherwise as provided in the Plan Rules. • Net income to which no participant is presently entitled will be accumulated by the Trustee as part of the capital of the Trust. • Under no circumstances may the Trustee distribute or apply any income for the benefit of the Company or any Group Company or reimburse the Company for any costs paid by the Company in accordance. Company A will incur implementation and on-going costs to administer the Trust. On an ongoing basis, additional costs that Company A incurs as the Trustee fulfils its obligations and powers as outlined in the Trust Deed include brokerage, commission and other transaction costs, financial statement audit, and compliance costs. Additionally, as indicated in the Trust Deed Company A may, by agreement with the Trustee, reimburse the Trustee for the ongoing costs in fulfilling its obligations.


Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision . All legislative references are to provisions of the Income Tax Assessment Act 1997 (ITAA 1997), unless otherwise indicated. | Detailed Reasoning - Questions 1 to 5 - application of the single entity rule in section 701-1: The consolidation provisions 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. Consequently, the subsidiary members cease to be recognised as separate entities during the period that they are members of the income tax consolidated group with the head company of the group being the only entity recognised for income tax purposes. 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 Company A (or the Company) income tax consolidated group (the Group) are treated, for income tax purposes, as having been undertaken by the Company as the head company of the Group. | Detailed Reasoning - Questions 6 to 8: The SER in section 701-1 has no application to the Fringe Benefits Tax Assessment Act 1986 (FBTAA) . The Commissioner has therefore provided a ruling to the Company and each company named in this ruling which is a member of the Group in relation to questions 6 to 8. | Detailed Reasoning - Question 1: For present purposes, subsection 8-1(1) will allow 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 A carries on a business of work management services which produces assessable income. The Company operates an employee share scheme (ESS) as part of its remuneration strategy. Under the Plans, Company A grants performance rights (Rights) to employees (which entitles the holder to subscribe for one fully paid ordinary share in Company A) and makes irretrievable contributions to the Trust (in accordance with the Plans rules and the Trust Deed) which the Trustee will use to acquire shares (either on-market or by subscription) for allocation to Participants to satisfy their allocation of shares. | Detailed Reasoning - Incurred in carrying on a business: Company A or its Group Companies make contributions to the Trustee to enable the Trustee to subscribe for or acquire those Shares. The contributions made by the Company are irretrievable and non-refundable to the Company in accordance with the Trust Deed as: • Under no circumstances may the Trustee repay any part of any Contribution Amount to the Company or any Group Company; and • The Trust Deed states the Company does not, and no Group Company will, have and shall not have any beneficial interest, in any shares that are subscribed for or acquired. This provision overrides any contrary provision in this deed. • Nothing in this deed confers or is intended to confer on any Group Company, any charge, lien or any other proprietary right or proprietary interest in the Shares acquired by the Trustee • On termination of the Trust, the Trustee may not distribute or apply any income or capital for the benefit of the Company or any Group Company. Company A will grant Rights under the Plan as part of its remuneration and reward program for Participants. The costs incurred by the Company for the acquisition of shares to satisfy these arise as part of these remuneration arrangements, and contributions to the Trust are part of an on-going series of payments in the nature of remuneration of its employees. | Detailed Reasoning - Not capital or of a capital nature: The costs will be an outgoing incurred for periodic funding of a bona fide ESS for Eligible Employees of the Company and the Group. Costs incurred are likely to be in relation to more than one grant of Rights (rather than being one-off), and the Company intends to satisfy Rights using Shares acquired by the Trust. This indicates that the irretrievable contributions to the Trust are ongoing in nature and are part of the broader remuneration expenditure of the Company. 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. | Detailed Reasoning - Question 2: Section 8-1 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, incurred in producing exempt or non-assessable non-exempt income or where a provision of the tax law prevents the deduction. Company A carries on a business which produces assessable income. Company A operates an ESS as part of its remuneration strategy. Company A incurs on-ongoing administration costs for operating the ESS including: • brokerage, • commission and other transaction costs, • financial statement audit, and • compliance costs. These costs are regular and recurrent employment expenses which are deductible under section 8-1 as they are costs necessarily incurred in running the ESS while carrying on its business for the purpose of gaining or producing its assessable income (ATO Interpretative Decision ATO ID 2014/42 Employer costs for the purpose of administering its employee share scheme are deductible) . | Detailed Reasoning - Question 3: Section 83A-210 applies to determine the timing of the deduction, but only in respect of the contribution provided to the trust to purchase shares in excess of the number required to grant the relevant Performance Rights to the employees arising in the year of income from the grant of Performance Rights, under an ESS. 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 . The PRP and the Initial Plan are ESSs for the purposes of subsection 83A-10(2) as they are schemes under which ESS interests (i.e. a beneficial interest in a share or a beneficial interest in a right to acquire a beneficial interest in a share) are provided to employees (i.e. Participants) in relation to their employment with Company A or Group Companies. The Plans contain a number of interrelated components which includes the provision of irretrievable cash contributions by Company A or Group Companies to the Trustee of the Trust. These contributions enable the Trustee to acquire Company A shares for the purpose of enabling each Participant, indirectly as part of the Plans, to acquire ESS interests. The irretrievable cash contribution can only be deducted from the assessable income of Company A in the income year when the relevant beneficial interest in a share in Company A, or beneficial interest in a Performance Right to a beneficial interest in a share in Company A, is acquired by a Participant under the PRP or the Initial Plan. | Detailed Reasoning - Question 4: Part IVA of the Income Tax Assessment Act 1936 (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 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 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 the Company to obtain a tax benefit. | Detailed Reasoning - Ordinary Income: Section 6-5 provides that your 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 they were received in carrying on a business. In an ESS, where the trustee subscribes to the company for an issue of shares and pays the full subscription price for the shares, the company receives a contribution of share capital from the trustee. The character of the contribution of share capital received by Company A from the Trustee can be determined by the character of the right or thing disposed of in exchange for the receipt. Here, Company A is issuing the Trustee with new shares in itself. The character of the newly issued share is one of capital. Therefore, the receipt, being the subscription proceeds, takes the character of share capital, and accordingly, is also of a capital nature. This view is supported by the reasoning in ATO Interpretative Decision ATO ID 2010/155 Income Tax - Employee Share Scheme: assessability to an employer of the option exercise price paid by an employee. Accordingly, when Company A receives subscription proceeds from the Trustee where the Trustee has subscribed for new shares in Company A to satisfy obligations to Participants in the Plans, these are a capital receipt. That is, it will not be on revenue account, and will not be ordinary income under section 6-5. | Detailed Reasoning - 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. Company A will receive an amount for the subscription of shares by 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. Subsection 20-20(3) establishes that an amount received by you as 'recoupment' of a loss or outgoing is an 'assessable recoupment' if you can deduct the loss or outgoing for an earlier income year under a provision listed in section 20-30. Recoupment is defined in subsection 20-25(1) to include any kind of recoupment, reimbursement, refund, insurance, indemnity or recovery, however described and a grant in respect of a loss or outgoing. The Explanatory Memorandum to the Tax Law Improvement Bill 1997 states that the ordinary meaning of recoupment encompasses any type of compensation for a loss or outgoing. Subsection 20-30 contains the tables that shows the deductions for which recoupments are assessable. As indicated above, the irretrievable cash contributions to the Trust to subscribe for shares are deductible by Company A under section 8-1. The relevant table in 20-30(1) indicates that there is a recoupment for deductions under 8-1 for bad debts and for rates or taxes. The receipt by Company A made in return for issuing shares to the Trustee would not be a recoupment of previously deducted expenditure under section 8-1 regarding bad debts or rates and taxes therefore section 20-30 does not apply. Therefore, the subscription proceeds will not be an assessable recoupment under section 20-20. | Detailed Reasoning - Capital Gains Tax: Section 102-20 states that you make a capital gain or loss if and only if a CGT event happens. No CGT events occur when the Trust satisfies its obligations by subscribing for new shares in Company A. The relevant CGT events that may be applicable when the subscription proceeds are received by Company A are CGT events D1 (creating a contractual or other rights) and H2 (receipt for event relating to a CGT asset). However, paragraph 104-35(5)(c) states that CGT event D1 does not happen if a company issues or allots equity interests or non-equity shares in the company. In this case, Company A is issuing shares, being equity interests as defined in section 974-75, to the Trustee, therefore CGT event D1 does not happen. In relation to CGT event H2, paragraph 104-155(5)(c) also states that CGT event H2 does not happen if a company issues or allots equity interests or non-equity shares in the company. Therefore, CGT event H2 does not occur. Since no CGT event occurs, there is no amount that will be assessable as a capital gain to Company A. Therefore, when the Trust satisfies its obligations by subscribing for new shares in Company A to meet the ESS interest of Participants, the subscription proceeds will not be included in the assessable income of Company A under section 6-5 or section 20-20, nor trigger a CGT event under Division 104. | Detailed Reasoning - Question 6: An employer's liability to fringe benefits tax (FBT) arises under section 66 of the Frings Benefits Tax Assessment Act 1986 (FBTAA), 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 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. In particular, paragraph (h) of subsection 136(1) of the FBTAA 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; The Commissioner accepts that the Plans are ESSs, the rights for Company Shares provided under the Plans are ESS interests and that Subdivision 83A-C applies to those ESS interests. Accordingly, the provision of ESS interests under the Plans will not be subject to FBT on the basis that they are acquired by Participants under an ESS (to which Subdivision 83A-C will apply) and are thereby excluded from being a fringe benefit by virtue of paragraph (h) of the definition of fringe benefit in subsection 136(1) of the FBTAA. In addition, when an Right 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 and not in respect of employment (refer ATO Interpretative Decision ATO ID 2010/219 Fringe Benefits Tax Fringe benefit: shares provided to employees upon exercise of rights granted under an employee share scheme ). | Detailed Reasoning - Question 7: One benefit excluded from being a 'fringe benefit', pursuant to paragraph (ha) of subsection 136(1) of the FBTAA, is a benefit constituted by the acquisition of money or property by an employee share trust within the meaning of the ITAA 1997. 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 is relevant. To qualify as an employee share trust, a trustee's activities must be limited to those described in paragraphs 130-85(4)(a), (b) and (c). Paragraph 130-85(4)(a) and (b) are satisfied because: • The Trust acquires shares in Company A and • The Trust ensures that ESS interests as defined in subsection 83A-10(1) are provided under an ESS (as defined in subsection 83A-10(2)) by allocating those shares to the employees in accordance with the Trust Deed and 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(4)(a) and (b). The phrase 'merely incidental' takes its ordinary meaning, with further guidance drawn from the context and purpose of the legislation in which it appears. 'Merely incidental' is not defined in the legislation and has not been judicially considered in the context of subsection 130-85(4). The Macquarie Dictionary defines 'merely' to mean 'only as specified, and nothing more'. 'Incidental' is defined as 'happening or likely to happen in fortuitous or subordinate conjunction with something else'. The Commissioner's views on the types of activities that are merely incidental and not merely incidental are set out in Taxation Determination TD 2019/13 Income tax: what is an 'employee share trust'? Activities that result in employees being provided with additional benefits (such as the provision of financial assistance, including a loan to acquire the shares) are not considered to be merely incidental. In the present case, the 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 merely incidental to the primary purposes stated in paragraphs 130-85(4)(a) and (b). This is consistent with the objects of the Trust, namely for the sole purpose of undertaking activities that are in line with the definition of an employee share trust under subsection 130-85(4). Additionally, the Trust deed require the Trustee to administer the Trust so that it satisfies the definition of "employee share trust" for the purposes of subsection 130-85(4). Therefore, the cash contribution made by the Company or the Group to fund the subscription for or acquisition on-market of Shares by the Trust will not be a fringe benefit. | Detailed Reasoning - Question 8: PS LA 2005/24 Application of General Anti-Avoidance Rules explains the application of Part IVA or other general anti-avoidance rules to an arrangement, including the operation of section 67 of the FBTAA 1986 (refer to paragraphs 185-191). The Commissioner would only seek to make a determination under section 67 of the FBTAA 1986 if the arrangement resulted in the payment of less fringe benefits tax than would be payable but for entering into the arrangement. Paragraph 191 of PS LA 2005/24 states: 191. The approach outlined in this practice statement (refer to paragraphs 75 to 150) to the counterfactual and the sole or dominant purpose test in Part IVA is relevant (except that amendments corresponding to the 2013 amendments of Part IVA have not been made to section 67) and should be taken into account by Tax officers who are considering the application of section 67 of the FBTAA. Irretrievable cash contributions made by Company A or Group Companies to the Trust will not be a fringe benefit defined in subsection 136(1) of the FBTAA 1986 as explained in the reasons for question 6 and 7. As a result, the FBT liability of Company A of Group Companies is not any less than it would have been but for the existence of the arrangement. The Commissioner will not make a determination that section 67 of the FBTAA 1986 applies to increase the aggregate fringe benefits amount of Company A or Group Companies by the amount of the tax benefit gained from the irretrievable cash contributions made by Company A or Group Companies to the Trustee of the Trust to fund the subscription for, or acquisition on-market of, Company A shares pursuant to the Plans.

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