Private ruling: Non-executive Director Share Plan
Date of advice: 26 July 2019
Published: September 2019
Ruling period: Income year ending 30 June 20xx | Income year ending 30 June 20xx | Income year ending 30 June 20xx | Income year ending 30 June 20xx | Income year ending 30 June 20xx | This ruling applies for the following fringe benefits tax years | Income year ending 31 March 20xx | Income year ending 31 March 20xx | Income year ending 31 March 0xx | Income year ending 31 March 20xx | Income year ending 31 March 20xx
Date scheme commenced: 1 July 20xx

Ruling: Q1: Will the Company have reporting obligations under section 392-5(1)(b) of Schedule 1 to the Taxation Administration Act 1953 (TAA 1953) in relation to the Share Rights granted under the Share Plan on the earliest of the following events occurring: a) When the Share Rights have vested as Restricted Shares and all genuine disposal restrictions on the Restricted Shares cease to apply b) The participant is treated as ceasing employment within the meaning of section 83A-330 of the Income Tax Assessment Act 1997 (ITAA 1997), or 15 years from when the Share Rights are granted? | A1: Yes | Q2: Is the provision of Share Rights granted to Participants by Company A under the Plan a 'fringe benefit' within the meaning of that term in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986? | A2: No | Q3: Is the provision of Shares in satisfaction of Share Rights granted to Participants under the Plan a 'fringe benefit' within the meaning of that term in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986? | A3: No

Relevant facts and circumstances: 1. Company A is an Australian company listed on the Australian Securities Exchange (ASX). 2. The Share Plan is an employee share scheme to be established by Company A for non-executive directors of Company A to acquire equity in Company A through the grant of rights to fully-paid ordinary shares in Company A (Share Rights). 3. The Share Plan is governed by the Plan Rules which provide that the Board may provide non-executive directors with an invitation to elect to sacrifice part or all of the fees for their services as a non-executive director to acquire Share Rights (Invitation). 4. A non-executive director can accept the Invitation to participate in the Share Plan by following the instructions set out in the Invitation. 5. The Invitation provided to the participant takes precedence over the Plan Rules. 6. Subject to shareholder approval, Share Rights equivalent to the Fees Sacrificed will be granted to the participant twice a year. If shareholder approval is not obtained, the participant will receive the full amount of their Director's fees in the ordinary course. 7. The number of Share Rights that will be granted to the participant is calculated by dividing the sacrificed director fees by the volume weighted average closing price of Company A shares traded on the ASX during the twenty trading days immediately preceding the date of grant. 8. The Grant Date will be the day that Share Rights are allocated. 9. The Share Rights are non-transferrable and carry no dividend or other rights. The Share Rights are not tradeable securities. 10. The Share Rights are not subject to performance conditions or any risk of forfeiture. 11. The Share Rights vest six months after the date of grant, and vesting is not subject to any performance conditions. On vesting, the Share Rights will convert into Restricted Shares. 12. On vesting of the Share Rights, the participant will receive Company A Shares which are subject to dealing restrictions for a period of time (Restricted Shares). 13. The Restricted Shares will be held in the participant's own name subject to an ASX Holding Lock until the end of the Restriction Period. 14. The ASX Holding Lock will be lifted at the earliest of: i. When the participant ceases to be a director of Company A, ii. When the restriction period nominated by the participant ends, iii. The Board determines that the ASX holding lock should be lifted in exceptional circumstances, and iv. 15 years from the date the Share Rights were granted. 15. The Board's policy of lifting the ASX holding lock in exceptional circumstances. For example, in circumstances of a total and permanent disablement situation and where the Board determines that an original Vesting Condition is no longer appropriate or applicable. 16. If the participant ceases to be a director of Company A, then: i. Subject to the Board's discretion, any Share Rights granted to the participant that have not vested will remain on foot and vest in the ordinary course ii. Share Rights that vest after the participant ceases directorship will not be subject to any ASX holding lock, and iii. The ASX holding lock on any Restricted Shares will be lifted. 17. The Plan Rules state that Subdivision 83A-C applies to the Share Rights. 18. The Plan comprises two components: 19. No participant in the Share Plan will otherwise hold a beneficial interest in more than 10% of the shares in Company A, or be in a position to cast, or control the casting of, more than 10% of the maximum number of votes that might be cast at a general meeting of Company A. 20. The predominant business of Company A is not the acquisition, sale or holding of shares, securities or other investments. 21. The participants are non-executive directors of Company A. Non-executive directors of Company A are not employed by any company in the Group in other capacities. 22. The Share Plan is an effective salary sacrifice arrangement for the purposes of Taxation Ruling TR 2001/10 Income tax: fringe benefits tax and superannuation guarantee: salary sacrifice arrangements (TR 2001/10). 23. The predominant business of Company A is not, and will not be at the time when the participants acquire Rights under the Plan, the acquisition, sale or holding of shares, securities or other investments (whether directly or indirectly through one or more companies, partnerships or trusts). 24. Company A has been incorporated for more than 10 years.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 83A-10(1) | Income Tax Assessment Act 1997 subsection 83A-10(2) | Income Tax Assessment Act 1997 subsection 83A-20(1) | Income Tax Assessment Act 1997 section 83A-30 | Income Tax Assessment Act 1997 section 83A-33 | Income Tax Assessment Act 1997 subsection 83A-45(1) | Income Tax Assessment Act 1997 subsection 83A-45(2) | Income Tax Assessment Act 1997 subsection 83A-45(3) | Income Tax Assessment Act 1997 subsection 83A-45(6) | Income Tax Assessment Act 1997 subsection 83A-105(1) | Income Tax Assessment Act 1997 subsection 83A-105(3) | Income Tax Assessment Act 1997 subsection 83A-105(6) | Income Tax Assessment Act 1997 section 83A-120 | Income Tax Assessment Act 1997 subsection 83A-315(1) | Income Tax Assessment Act 1997 section 83A-330 | Income Tax Assessment Act 1997 subsection 995-1(1) | Income Tax Assessment Regulations 1997 Regulation 83A-315.01 | Income Tax Assessment Regulations 1997 Regulation 83A-315.03 | Income Tax Assessment Regulations 1997 Regulation 83A-315.04 | Taxation Administration Act 1953 Schedule 1 subsection 392-5(1)(a) | Taxation Administration Act 1953 Schedule 1 subsection 392-5(1)(b) | Fringe Benefits Tax Assessment Act 1986 section 66 | Fringe Benefits Tax Assessment Act 1986 Subsection 136(1) | Fringe Benefits Tax Assessment Act 1986 Paragraph 136(1)(f) | Fringe Benefits Tax Assessment Act 1986 Paragraph 136(1)(h) | Fringe Benefits Tax Assessment Act 1986 Paragraph 136(1)(ha)

Reasons for decision: Summary: Paragraph 392-5(1)(b) of Schedule 1 to the TAA 1953 provides that: (1) An entity (the provider ) must give a statement to the Commissioner and to an individual for a *financial year if: ... (b) all of the following subparagraphs apply: (i) the provider has provided ESS interests to the individual (whether during the year or during an earlier year); (ii) Subdivision 83A-C of the Income Tax Assessment Act 1997 (about employee share schemes) applies to the interests; (iii) the *ESS deferred taxing point for the interests occurs during the year. Each of the requirements of paragraph 392-5(1)(b) of Schedule 1 to the TAA 1953 are considered below. | Detailed Reasoning - Subparagraph 392-5(1)(b)(i): The provider has provided ESS interests to the individual: Subsection 83A-10(1) of the ITAA 1997 provides that an ESS interest is a beneficial interest in either a share in a company or a right to acquire a share in a company. A Share Right is an ESS interest as it is a beneficial interest in a right to acquire a share in Company A. Therefore, subparagraph 392-5(1)(b)(i) of Schedule 1 to the TAA 1953 will be satisfied. | Detailed Reasoning - Subsection 392-5(1)(b)(ii): Subdivision 83A-C of the ITAA 1997 applies to the ESS interests: Subsection 83A-105(1) of the ITAA 1997 sets out the requirements that must be satisfied for Subdivision 83A-C of the ITAA 1997 to apply to an ESS interest: (1) This Subdivision applies, and Subdivision 83A-B does not apply, to an ESS interest in a company if: (a) Subdivision 83A-B would, apart from this section, apply to the interest (see section 83A-20); and (aa) after applying section 83A-315, there is still a discount given in relation to the interest; and (ab) section 83A-33 (about start ups) does not reduce the amount to be included in your assessable income in relation to the interest; and (b) subsections 83A-45(1), (2), (3) and (6) apply to the interest; and (c) if the interest is a beneficial interest in a * share: (i) subsection (2) of this section applies to the interest; and (ii) subsection (3) or (4) applies to the interest; and (d) if the interest is a beneficial interest in a right to acquire a beneficial interest in a share--subsection (3) or (6) applies to the interest. Each of the requirements of subsection 83A-105(1) of the ITAA 1997 are considered below. | Detailed Reasoning - Paragraph 83A-105(1)(a): Subdivision 83A-B of the ITAA 1997 would, apart from section 83A-105 of the ITAA 1997, apply: Subsection 83A-20(1) of the ITAA 1997 provides that Subdivision 83A-B of the ITAA 1997 applies to an ESS interest if you acquire the interest under an employee share scheme at a discount. Subsection 83A-10(2) of the ITAA 1997 explains that an employee share scheme is a scheme under which ESS interests in a company are provided to employees of the company or subsidiaries of the company in relation to their employment. Under the Share Plan, Share Rights will be offered and provided to non-executive directors of Company A . For the purposes of Division 83A of the ITAA 1997, an employee includes those individuals in relationships similar to employment as extended by section 83A-325 of the ITAA 1997 which includes directors of companies who provide services to an entity. Therefore, the Share Plan is an employee share scheme. The Share Rights are acquired by participants sacrificing part of their fees for their services as a director. ESS interests acquired under salary sacrifice arrangements are treated as acquired at a discount where an effective salary sacrifice arrangement has been put in place to acquire the ESS interests, meaning that where nothing else is paid for the ESS interests, they are acquired at a discount equal to their market value. Therefore, Subdivision 83A-B of the ITAA 1997 would apply to the Share Rights but for the operation of section 83A-105 of the ITAA 1997. | Detailed Reasoning - Paragraph 83A-105(1)(aa): After applying section 83A-315 of the ITAA 1997, there is still a discount given in relation to the interest: Section 83A-30 of the ITAA 1997 provides that an ESS interest is taken to have been acquired by the employee for its market value (rather than its discounted value) to be calculated within the ordinary meaning of the term 'market value'. 'Market value' is defined in subsection 995-1(1) of the ITAA 1997 as having a meaning affected by Subdivision 960-S of the ITAA 1997. The provisions in sections 960-405 to 960-415 of the ITAA 1997 do not affect the meaning of "market value" in these circumstances. The ordinary meaning of 'market value' is the price that a willing but not anxious buyer would have to pay to a willing but not anxious seller for the item, Spencer v Commonwealth of Australia [1907] HCA 82. Market value has also been described as the best price that may reasonably be obtained for property if sold in the general market. Subsection 83A-315(1) of the ITAA 1997 provides that whenever Division 83A of the ITAA 1997 uses the market value of an ESS interest, instead use the amount specified in the Income Tax Assessment Regulations 1997 (ITA Regs) in relation to the interest, if the ITA Regs specify such an amount. Regulation 83A-315.01 of the ITA Regs provides: (1) For subsection 83A-315 of the Act, the amount, in relation to an unlisted right that must be exercised within 15 years after the day when the beneficial interest in the right was acquired is, at the choice of the individual: (a) the market value of the right; or (b) the amount determined by the application of regulations 83A-315.02 to 83A-315.09. Regulation 83A-315.03 states that if the lowest amount that must be paid to exercise a right to acquire a beneficial interest in a share is nil or cannot be determined, the value of the right on a particular day is the same as the market value of the share on that day. To avoid doubt, if an individual acquires the beneficial interest in a share or right, the value that is applicable for the purposes of this Division is the value of the share or right, not the value of the interest in the share or right, as per Regulation 83A-315.04 of the ITA Regs. The number of Share Rights that will be granted to the participant is calculated by dividend the sacrificed director fees by the volume weighted average closing price of Company A shares traded on the ASX during the twenty trading days immediately preceding the date of grant. TR 2001/10 provides that an effective salary sacrifice arrangement means an employee's right to salary or wages is foregone before the employee has earned the entitlement to receive those salary and wages. The Share Plan is an effective salary sacrifice arrangement. Therefore, the ESS interests are considered to have been acquired for nil consideration, at a discount equal to market value. The provisions under section 83A-315 of the ITAA 1997 do not operate to affect the amount of discount given in relation to the interest. As such, there is still a discount given in relation to the Share Rights. Paragraph 83A-105(1)(ab): Section 83A-33 of the ITAA 1997 (about start ups) does not reduce the amount to be included in your assessable income in relation to the interest Section 83A-33 of the ITAA 1997 reduces amounts included in assessable income for start-up companies. Subsections 83A-33(2) to (6) of the ITAA 1997 set out all of the circumstances that must apply for section 83A-33 of the ITAA 1997 to be applicable: 1. The company (and its corporate group) must not have any interests listed on an approved stock exchange in the income year prior to the ESS interest being offered; 2. The company (and its connected entities) must have been incorporated for less than 10 years; and 3. The company that grants the ESS interests must have an aggregated turnover of less than $50 million in the income year prior to the year the interests are granted; 4. The employing company (which can be a subsidiary of the company granting the ESS interests are being offered) must be an Australian resident taxpayer. 5. For start-ups to be eligible for the start up concession, ESS interests that are beneficial interests in a share must be acquired at a discount of no more than 15% of its market value when it is acquired. In relation to ESS interests that are a beneficial interest in a right to a share, the amount that must be paid to exercise the right is greater than or equal to the market value of an ordinary share in the company when it is acquired. Company A is not a start-up company for the purposes of section 83A-33 of the ITAA 1997 as the company is listed on the ASX and has been incorporated for more than 10 years. Therefore, paragraph 83A-105(1)(ab) of the ITAA 1997 has no application as Company A is not a start-up company. | Detailed Reasoning - Paragraph 83A-105(1)(b): Subsection 83A-45(1), (2), (3) and (6) of the ITAA 1997 apply to the interest: Subsection 83A-45(1) of the ITAA 1997 applies to ESS interests in a company if the participant is employed by the company when they acquire the interest. Share Rights will only be granted to non-executive directors of Company A under the Share Plan. For the purposes of Division 83-A, section 83A-325 of the ITAA 1997 provides that an employee includes individuals who provide services to an entity under an arrangement. Non-executive directors of Company A provide services to Company A under an arrangement. Therefore, this requirement will be satisfied. Subsection 83A-45(2) of the ITAA 1997 applies to an ESS interest acquired under an employee share scheme if, when the interests are acquired, all the ESS interests available for acquisition under the scheme relate to ordinary shares. The Share Rights available under the Share Plan are rights to ordinary shares in Company A, satisfying the requirements of subsection 83A-45(2) of the ITAA 1997. Subsection 83-45(3) of the ITAA 1997 applies to an ESS interest in a company unless the predominant business of the company is the acquisition, sale or holding of shares, securities or other investments, and you are an employee of the company as well as another company that is a subsidiary of the first company, a holding company of the first company or a subsidiary of a holding company of the first company. The predominant business of Company A is not the acquisition, sale or holding of shares, securities or other investments. Further, the participants are non-executive directors of Company A are not employed by any company in the Group under basic concepts. Therefore, the requirements under subsection 83A-45(3) of the ITAA 1997 are satisfied. Subsection 83A-45(6) of the ITAA 1997 applies to an ESS interest in a company if, immediately after acquiring the interest, the participant does not hold a beneficial interest in more than 10% of the shares of the company, and they are not in a position to cast more than 10% of the maximum number of votes that may be cast at a general meeting of the company. No participant in the Share Plan will hold a beneficial interest in more than 10% of the shares in Company A, or be in a position to cast, or control the casting of, more than 10% of the maximum number of votes that may be cast at a general meeting of Company A. Therefore, the requirement under subsection 83A-45(6) of the ITAA 1997 is satisfied. As subsections 83A-45(1), (2), (3) and (6) of the ITAA 1997 all apply to the Share Rights under the Share Plan paragraph 83A-105(1)(b) of the ITAA 1997 is satisfied. Subparagraph 83A-105(1)(d): If the interest is a beneficial interest in a right to acquire a beneficial interest in a share-subsection 83A-105 (3) or (6) of the ITAA 1997 applies to the interest As the Share Rights are a beneficial interest in a right to acquire a share, paragraph 83A-105(1)(d) of the ITAA 1997 applies, and paragraph 83A-105(1)(c) of the ITAA 1997 does not apply. Subsection 83A-105(1)(d) of the ITAA 1997 requires that, if the interest is a beneficial interest in a right to acquire a beneficial interest in a share, either subsection 83A-105(3) or subsection 83A-105(6) of the ITAA 1997 apply to the interest. Subsection 83A-105(3) of the ITAA 1997 applies if there is a real risk of forfeiture of the acquired ESS interests. The Share Rights provided under the Share Plan are not subject to a real risk of forfeiture. Therefore, this subsection has no application. Subsection 83A-105(6) applies to an ESS interest a participant acquires under an employee share scheme during an income year at a discount if the interest is a beneficial interest in a right, and at the time the interest was acquired the scheme genuinely restricted the immediate disposal of the right, and the governing rules of the scheme expressly stated that Subdivision 83A-C of the ITAA 1997 applies to the scheme. A Share Right acquired under the Share Plan is a beneficial interest in a right and the Share Rights are non-transferrable or tradeable securities. The Share Rights, as determined above, are acquired at a discount. Further, the Plan Rules states that Subdivision 83A-C of the ITAA 1997 applies to the Share Plan. Therefore, subsection 83A-105(6) of the ITAA 1997 is satisfied. As each of the relevant requirements of section 83A-105(1) of the ITAA 1997 are satisfied, Subdivision 83A-C of the ITAA 1997 will apply to the Share Rights. | Detailed Reasoning - Subparagraph 392-5(1)(b)(iii): The ESS deferred taxing point for the interest occurs during the year: In relation to the ESS deferred taxing point for a right to acquire a share, section 83A-120 of the ITAA 1997 provides: (1) This section applies if the * ESS interest is a beneficial interest in a right to acquire a beneficial interest in a * share. Meaning of ESS deferred taxing point (2) The ESS deferred taxing point for the • ESS interest is the earliest of the times mentioned in subsections (4) to (7). (3) However, the ESS deferred taxing point for the * ESS interest is: (a) the time you dispose of the ESS interest (other than by exercising the right); or (b) if you exercise the right--the time you dispose of the beneficial interest in the * share; if that time occurs within 30 days after the time worked out under subsection (2). No restrictions on disposing of right (4) The first possible taxing point is the earliest time when: (a) you have not exercised the right; and (b) there is no real risk that, under the conditions of the * employee share scheme, you will forfeit or lose the * ESS interest (other than by disposing of it, exercising the right or letting the right lapse); and (c) if, at the time you acquired the ESS interest, the scheme genuinely restricted you immediately disposing of the ESS interest--the scheme no longer so restricts you. Cessation of employment (5) The 2nd possible taxing point is the time when the employment in respect of which you acquired the interest ends. Maximum time period for deferral (6) The 3rd possible taxing point is the end of the 15 year period starting when you acquired the interest. No restrictions on disposing of a share after exercising the right (7) The 4th possible taxing point is the earliest time when: (a) you exercise the right; and (b) there is no real risk that, under the conditions of the scheme, after exercising the right, you will forfeit or lose the beneficial interest in the * share (other than by disposing of it); and (c) if, at the time you acquired the ESS interest, the scheme genuinely restricted you immediately disposing of the beneficial interest in the share if you exercised the right--the scheme no longer so restricts you. The first possible taxing point in subsection 83A-120(4) will not occur as the restriction on dealing with the Share Rights will not be lifted at any time and the scheme genuinely restricts the participant from immediately disposing of the Share Rights, resulting in the condition in subsection 83A-120(4)(c) not being met. The second possible taxing point in subsection 83A-120(5) of the ITAA 1997 will occur if the participant ceases to provide services under an arrangement to Company A as a non-executive director. The third possible taxing point in subsection 83A-120(6) of the ITAA 1997 will be the maximum period for deferral and will occur fifteen years from when the Share Rights are granted to the participant. The fourth possible taxing point under Subsection 83A-120(7) will occur when the Share Rights have vested, the non-executive directors have received Restricted Shares and all disposal restrictions on the Restricted Shares cease to apply. | Detailed Reasoning - Conclusion: Subsection 392-5(1)(b) of Schedule 1 to the TAA 1953 requires that, in relation to Share Rights granted under the Share Plan, Company A must give a statement to the Commissioner and to an individual in the year the deferred taxing point for the interest occurs. The ESS deferred taxing point will arise when the earliest of the following events occurs: 1. The participant ceases employment through the provision of services under an arrangement to Company A as a non-executive director (per 83A-325 of the ITAA 1997), within the meaning of section 83A-330 of the ITAA 1997, 2. 15 years from when the Share Rights are granted to the participant, 3. The Share Rights have vested, the non-executive directors have received Restricted Shares and all genuine disposal restrictions on the Restricted Shares cease to apply. | Detailed Reasoning - Question 2: No amount will be subject to fringe benefits tax (FBT) unless a 'fringe benefit' is provided. A 'fringe benefit' arises under subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986) where a benefit is provided to an employee or associates of employees by the employer or an associate of the employer at any time during the year of tax in respect of the employment of the employee. Paragraph (h) of the definition of 'fringe benefit' in subsection 136(1) of the FBTAA 1986 provides that a fringe benefit does not include: a benefit constituted by the acquisition of an ESS interest under an employee share scheme (within the meaning of the ITAA 1997) to which Subdivision 83A-B or 83A-C of that Act applies The terms 'ESS interest' and 'employee share scheme' are defined in section 83A-10: (1) An ESS interest, in a company, is a beneficial interest in: a. a share in the company; or b. a right to acquire a beneficial interest in a share in the company. (2) An employee share scheme is a scheme under which ESS interests in a company are provided to employees or associates of employees (including past or prospective employees) of: a. the company; or b. subsidiaries of the company; in relation to the employees' employment. On the facts, the Participant acquired an ESS interest under an employee share scheme to which Subdivision 83A-B or Subdivision 83A-C applies. Therefore, the provision of Share Rights to a Participant under the Plan is excluded from being a fringe benefit within the definition in subsection 136(1) of the FBTAA 1986. | Detailed Reasoning - Question 3: As discussed in Question 2 above, no amount will be subject to fringe benefits tax (FBT) unless a 'fringe benefit' is provided. A 'fringe benefit' arises under subsection 136(1) of the FBTAA 1986 where a benefit is provided to an employee or associates of employees by the employer or an associate of the employer at any time during the year of tax in respect of the employment of the employee. Paragraph (h) of the definition of 'fringe benefit' in subsection 136(1) of the FBTAA 1986 provides that a fringe benefit does not include: a benefit constituted by the acquisition of an ESS interest under an employee share scheme (within the meaning of the ITAA 1997) to which Subdivision 83A-B or 83A-C of that Act applies However, Shares acquired by the Trustee and provided to Participants to satisfy vested Share Rights granted under the Plan are not ESS interests acquired under an employee share scheme to which Subdivision 83A-B or 83A-C applies pursuant to subsection 83A-20(2). Subsection 83A-20(2) states: However, this Subdivision [Subdivision 83A-B] does not apply if the ESS interest is a beneficial interest in a share that you acquire as a result of exercising a right, if you acquired a beneficial interest in the right under an employee share scheme. Accordingly, Shares provided to a Participant as a result of vested Share Rights that are converted to Shares are not ESS interests acquired under an employee share scheme to which Subdivision 83A-B or 83A-C applies and the exclusion in paragraph (h) of the definition of 'fringe benefit' in subsection 136(1) of the FBTAA 1986 does not apply. Shares provided to a Participant upon conversion of the Share Rights will only be a 'fringe benefit' if the shares are provided to the employee in respect of the employee's employment. Whilst the expression 'in respect of' has no fixed meaning, it has been considered by the courts in various statutory contexts. In J & G Knowles & Associates Pty Ltd v Federal Commissioner of Taxation (2000) 96 FCR 402; 2000 ATC 4151; (2000) 44 ATR 22 (J & G Knowles & Associates), the full Federal Court in examining its meaning in relation to FBT noted that: ... what must be established is whether there is a sufficient or material, rather than a causal connection or relationship between the benefit and the employment ... The situation is similar to that which existed in FC of T v. McArdle 89 ATC 4051 ; (1988) 19 ATR 1901 where an employee was granted valuable rights in respect of his employment which he subsequently surrendered in return for a lump sum payment. The full Federal Court noted that what had occurred under the surrender agreement was not the granting of a valuable benefit, but the exploitation of rights received from the employer in previous years. Accordingly, on the facts, the Participant obtained the Share in respect of the conversion of the Share Right and not in respect of employment. Therefore, the benefit (the Share) gained by a Participant upon the conversion of the Share Right granted under the Plan does not give rise to a fringe benefit within the meaning in subsection 136(1) of the FBTAA 1986, as no benefit has been provided to the employee in respect of the employment relationship.

Participants will be advised of a mandatory salary sacrifice of an amount up to 20% of director fees in a relevant income year, to acquire Share Rights in order to satisfy their obligations under a minimum shareholding policy, and/or | Participants may also voluntarily sacrifice an amount of their director fees to acquire additional Share Rights.