Private ruling: Employee share plan
Date of advice: 14 March 2018
Published: June 2018
Ruling period: 1 July 20XX to 30 June 20XX
Date scheme commenced: XX Month 20XX

Ruling: Q1: Will the irretrievable cash contributions, made by the Company to the Trustee of the Trust to fund the acquisition of shares in the Company, be assessable income of the Trust under section 6-5 or section 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No. | Q2: Will a capital gain or capital loss, that arises for the Trustee of the Trust as a result of either CGT event E5 or CGT event E7 happening in respect of the shares acquired by Participants by exercising the rights granted under the Plan, be disregarded under section 130-90 of the ITAA 1997? | A2: Yes. | Q3: Where a franked dividend is paid in by the Company in respect of an unallocated share held by the Trustee of the Trust to which no beneficiary is presently entitled, will the franked dividend be assessed to the Trustee under section 99A of the ITAA 1936? | A3: Yes. | Q4: Will the Trustee of the Trust be entitled to a tax offset for the franking credits attached to the franked dividend on the unallocated shares to which no beneficiary is presently entitled, under Subdivision 207-B of the ITAA 1997? | A4: Yes.

Relevant facts and circumstances: The Company is an Australian public company listed on the Australian Securities Exchange (ASX). Employee Share Plan The Company has implemented an Employee Share Plan (the Plan) as part of its remuneration strategy. Employee Share Trust To facilitate the operation of the Plan, the Company has established an Employee Share Trust (the Trust) for the sole purpose of acquiring shares in the Company for the benefit of Participants which to be funded by the irretrievable cash contribution made by the Company.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 95 | Income Tax Assessment Act 1936 section 99A | Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 6-10 | Income Tax Assessment Act 1997 section 83A-10 | Income Tax Assessment Act 1997 section 104-75 | Income Tax Assessment Act 1997 section 104-85 | Income Tax Assessment Act 1997 section 130-85 | Income Tax Assessment Act 1997 section 130-90 | Income Tax Assessment Act 1997 Subdivision 207-B

Reasons for decision: Summary: The irretrievable cash contributions made by the Company to the Trustee of the Trust to fund the acquisition of shares in the Company constitute capital receipts to the Trustee and are not included in assessable income of the Trust pursuant to section 6-5 or section 6-10 of the ITAA 1997. All of the requirements in section 130-90 of the ITAA 1997 have been satisfied and a capital gain or capital loss that arises for the Trustee of the Trust as a result of the relevant CGT event happening in respect of the shares acquired by Participant to satisfy the exercise of the Rights will be disregarded. Where no beneficiary is presently entitled to the net income of the Trust, the Trustee of Trust will be assessed and liable to pay tax on the net income of the Trust that relates to the unallocated shares under section 99A of the ITAA 1936. Where a franked distribution is paid in respect of an unallocated share, the Trustee will include an amount equal to the franking credit on the distribution in its assessable income under section 207-35 of the ITAA 1997. Provided that the Trustee does not make a related payment in relation to the franked distribution on an unallocated share and holds the unallocated share for a continuous period of not less than 45 days (excluding the day the share was acquired and if the share was disposed of, the day the disposal occurred) during the period beginning the day after the Trustee acquires the unallocated share and ending of the 45 th day after the unallocated share becomes ex dividend , then the Trustee will be a qualified person in respect of the dividend and be entitled to the benefit of the franking credits attached to franked distributions on unallocated shares to the extent of tax payable. Any excess franking tax offset is not refundable pursuant to section 67-25 of the ITAA 1997.