Private ruling: Irretrievable contributions made to Employee Share Plan
Date of advice: 22 August 2016
Published: September 2016
Ruling period: Income Tax Years: 1 July 20xx - 30 June 20xx | Fringe Benefits Tax Years: 1 April 20xx to 31 March 20xx
Date scheme commenced: 1 July 20xx

Ruling: Q1: Are the irretrievable contributions paid by the Company to the Company's Employee Share Trust (the Trust) a fringe benefit for the purpose of the Fringe Benefits Tax Assessment Act 1986 ? | A1: No. | Q2: Are the irretrievable contributions made by the Company to the Trust to enable the Trust to acquire shares, by subscribing for those shares or purchasing them on market, an allowable income tax deduction to the Company under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A2: Yes. | Q3: Is the deduction for the Company in respect of the irretrievable contributions to the Trust allowed in the year of income when the contribution is made to the Trust, provided it is in respect of rights to acquire shares that have previously been granted to employees? | A3: Yes. | Q4: Will the Commissioner make a determination under section 177F of Part IVA of the Income Tax Assessment Act 1936 (ITAA 1936) in relation to the arrangement where irretrievable contributions are paid by the Company to the Trust to fund the acquisition of the Company shares the arrangement where irretrievable contributions are made to the Trust to fund the acquisition of the Company shares? | A4: No.

Relevant facts and circumstances: The Company is listed on the Australian Securities Exchange (ASX). The Rights Plan The Company has established an employee share plan, the Plan, as part of its long-term strategy of creating shareholder wealth. The Board may from time to time at its discretion grant Rights under the Plan to eligible employees selected by the Board. Under the Plan, eligible employees are provided with performance rights, being a right to acquire shares in the future at no cost, subject to vesting conditions (the Rights). The Plan has been administered by the Trustee in accordance with the Company's Employee Share Plan Trust Deed (Trust Deed). Operation of the Trust An employee share trust (the Trust) has been established as a separate vehicle for the sole purpose of acquiring ordinary shares in the Company for the benefit of eligible employees under the Company's Plan. The Trust has been established with the sole purpose to acquire and hold Plan Shares pursuant to the Plan Rules for the benefit of Beneficiaries (Participants) of the Trust. Contributions made to the Trust by the Company Shares are acquired by the Trustee through contributions made by the Company to the Trustee. Shares acquired are held by the Trustee absolutely on behalf of the Participants. This arrangement is referred to as the Company's Plan. The cash contributions made by the Company to the Trustee of the Trust to fund the subscription for or acquisition of Shares by the Trust are irretrievable and non-refundable under the Trust Deed. The Company will incur costs associated with the services provided by the Trustee of the Trust and various implementation costs. Use of a Share Trust to facilitate the Plan The Company has provided the following commercial benefits of using a trust: • the Trust provides employees with the knowledge that the shares, and any incidental dividend income or associated rights, are held independently of the Company and the trustee has a fiduciary obligation to act in the interests of its beneficiaries, i.e. the Company's employees; • the Trust can enable the shares to be acquired progressively over time either on-market or via subscription; • the Company can manage its costs and share capital position by having the Trust acquire shares to hold on executives' behalf for a period of time, before the executives meet the vesting criteria and become entitled to the shares. If the executives do not meet the vesting criteria, the Trust can reallocate the shares to back future grants; • the Trust provides the opportunity to improve cash flow planning as the Company can make contributions to the Trust periodically throughout the vesting period, thus giving the Company the flexibility to determine the most appropriate time to make contributions; • the Trust is the most appropriate vehicle to be used to acquire shares and accumulate dividend income during the vesting period for the purpose of acquiring further shares, meeting the costs of the Plan or distributing dividends to employees; • dividend income during the vesting period for the purpose of acquiring further shares, meeting the costs of the plan or distributing dividends to employees; • the Trust enables easier administration of the Company Plan, particularly, the 24 month holding lock implemented after the initial 12 months vesting period.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 | Income Tax Assessment Act 1997 Subsection 83A -10(2) | Income Tax Assessment Act 1997 Section 83A-210 | Income Tax Assessment Act 1997 Subsection 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 Subsection 995-1(1) | Income Tax Assessment Act 1936 Section 177A | Income Tax Assessment Act 1936 Subsection 177A(1) | Income Tax Assessment Act 1936 Subsection 177A(5) | Income Tax Assessment Act 1936 Subsection 177C(1) | Income Tax Assessment Act 1936 Paragraph 177D(2) | Income Tax Assessment Act 1936 Section 177F | Income Tax Assessment Act 1936 Subsection 177F(1) | Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Reasons for decision: Summary: No, the contribution of funds by the Company to the Trust will not be a fringe benefit for the purpose of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986). | Detailed Reasoning - Detailed reasoning: A 'fringe benefit' will only arise under subsection 136(1) of the FBTAA where benefits are provided by employers to employees or associates of employees. Under the definition of 'fringe benefit', a benefit must also be provided 'in respect of the employment of the employee'. No amount will be subject to FBT unless a 'fringe benefit' is provided. Paragraph (ha) of the definition of 'fringe benefit' in subsection 136(1) of the FBTAA states that a fringe benefit does not include: 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 )… An employee share trust (EST) is defined in subsection 995-1(1) of the ITAA 1997 as having the meaning given by subsection 130-85(4) of the ITAA 1997. Subsection 130-85(4) of the ITAA 1997 provides that an EST for an employee share scheme (having the meaning given by subsection 83A -10(2) of the ITAA 1997) is a trust whose sole activities are: (a) obtaining shares or rights in a company; and (b) ensuring that ESS interests in the company that are beneficial interests in those shares or rights are provided under the employee share scheme to employees, or to associates of employees, of: (i) the company; or (ii) a subsidiary of the company; and (iii) other activities that are merely incidental to the activities mentioned in paragraphs (a) and (b). The terms 'ESS interest' and 'employee share scheme' are defined in section 83A-10 of the ITAA 1997. The Commissioner accepts that the Plan described in the Relevant facts and circumstances of this Ruling is an employee share scheme under which relevant ESS interests (being Rights to acquire Shares) are acquired by employees of the Company, and the acquisition of those ESS interests are in relation to those employees' employment. A payment of money by the Company to the Trust is therefore not subject to FBT provided that the sole activities of the Trust are obtaining Shares or Rights to acquire Shares in the Company. Undertaking the activities mentioned in paragraphs 130-85(4)(a) and 130-85(4)(b) of the ITAA 1997 will also require that the Trustee undertake incidental activities that are a function of managing the Plan and administering the Trust. For the purposes of paragraph 130-85(4)(c) of the ITAA 1997, ATO Interpretative Decision 2010/108 Income Tax: Employee share trust that acquires shares to satisfy rights provided under an employee share scheme and engages in other incidental activities (ATO ID 2010/108) sets out the Commissioner's views on an EST that acquires shares to satisfy rights provided under an employee share scheme and engages in other incidental activities. In particular, the Commissioner considers that activities that are a necessary function of managing an employee share scheme and administering a trust will satisfy the incidental activities test. Such activities include: • the opening and operating of a bank account to facilitate the receipt and payment of money; • the receipt of dividends in respect of shares held by the EST on behalf of an employee, and their distribution to an employee; • the receipt of dividends in respect of unallocated shares and using those dividends to acquire additional shares for the purposes of the employee share scheme; • dealing with shares forfeited under an employee share scheme including the sale of forfeited shares and using the proceeds of sale for the purpose of the employee share scheme; • the transfer of shares to employee beneficiaries or the sale of shares on behalf of an employee beneficiary and the transfer to the employee of the net proceeds of the sale of those shares; • the payment or transfer of trust income and property to the default beneficiary on the winding up of the trust where there are no employee beneficiaries. • receiving and immediately distributing shares under a demerger 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 merely incidental. The Trust has been established to be an EST with the sole purpose to manage and administer the employee share plan pursuant to the Plan Rules for the benefit of the Participants. Based on the above, it is accepted that the Trust is an employee share trust, as defined in subsection 995-1(1) of the ITAA 1997. The functions of the Trustee of the Trust (acquiring, holding and allocating ESS interests) are limited to those activities mentioned in paragraphs 130-85(4)(a) and (b) of the ITAA 1997, or are merely incidental activities as referred to in paragraph 130-85(4)(c) of the ITAA 1997. As paragraph (ha) of the definition of fringe benefit in subsection 136(1) of the FBTAA excludes the contributions to the Trustee of the EST from being a fringe benefit, the Company will not be required to pay FBT in respect of the irretrievable cash contributions it makes to the Trustee of the Trust to fund the acquisition of the Company Shares in accordance with the Trust Deed. | Summary: Yes, the irretrievable contributions made by the Company to the Trust to enable the Trust to acquire shares, by subscribing for those shares or purchasing them on market, will be an allowable income tax deduction to the Company under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). | Detailed Reasoning - Detailed reasoning: All references are to the Income Tax Assessment Act 1997 (ITAA 1997) unless otherwise stated. An employer is entitled to a deduction under section 8-1 for a contribution paid to the trustee of an employee share trust that is either: • incurred in gaining or producing assessable income ('first limb') or • necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income ('second limb') to the extent the contribution is not private or domestic in nature, is not of capital or of a capital nature, does not relate to the earning of exempt income or non-assessable non-exempt income and deductibility is not precluded by another provision of the ITAA 1997 or ITAA 1936. | Detailed Reasoning - Contribution to the trustee of an employee share trust: To qualify for a deduction under section 8-1 a contribution to the trustee of an employee share trust must be incurred. As a broad guide, a taxpayer incurs an outgoing at the time the taxpayer owes a present money debt that they cannot escape. This must be read subject to the propositions developed by the courts, which are discussed in more detail in Taxation Ruling TR 97/7 Income tax: section 8-1 - meaning of 'incurred' - timing of deductions (TR 97/7) and Taxation Ruling TR 94/26 Income tax: subsection 51(1) - meaning of incurred - implications of the High Court decision in Coles Myer Finance (TR 94/26). A contribution made to the trustee of an employee share trust is incurred only when the ownership of that contribution passes from an employer to the trustee of the employee share trust and there is no circumstance in which the employer can retrieve any of the contribution - Pridecraft Pty Ltd v. Federal Commissioner of Taxation [2004] FCAFC 339 (Pridecraft); Spotlight Stores Pty Ltd v. Commissioner of Taxation [2004] FCA 650 (Spotlight). The Company has established an employee share trust (the Trust) under the terms of the Trust Deed. The Trust's purpose is of acquiring Shares for the benefit of employees or otherwise facilitating the operation and implementation of the Plan. Under the Trust Deed, the Company will make contributions to the Trust to allow the Trustee to acquire shares for the benefit of Participants under the Company's Plan. Pursuant to the terms of the Trust Deed, the contributions the Company makes to the Trust are irretrievable and non-refundable to the Company. Given these facts, it is considered that the contributions made to the Trustee of the Trust by the Company will be incurred at the time the contributions are made. | Detailed Reasoning - For the purpose of gaining or producing assessable income: Further, to be deductible under section 8-1, a contribution must have been incurred in gaining or producing assessable income (the first limb) or necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income (the second limb). In order to satisfy the second limb of section 8-1, there must be a relevant connection between the outgoing and the business. An expense will have the relevant connection to the business when it is 'desirable or appropriate in the pursuit of the business ends of the business' ( Ronpibon Tin NL and Tongkah Compound NL v. FC of T (1949) 78 CLR 47 (Ronpibon); Magna Alloys & Research Pty Ltd v. Federal Commission of Taxation (1980) 49 FLR 183 (Magna Alloys)). Draft Taxation Ruing TR 2014/D1 Income tax: employee remuneration trust arrangements provides the Commissioner's current view on a broad scope of taxation consequences for employers, trustees and employees who participate in an employee remuneration trust (ERT) arrangement. In the current case, the way in which the Trust has been established and operates is in line with the elements of an ERT stated in paragraph 9 of TR 2014/D1. Paragraph 14 of TR 2014/D1 provides where an employer: • carries on a business for the purpose of gaining or producing assessable income and engages employees in the ordinary course of carrying on that business, • makes a contribution to the trustee of an employee share trust, and • at the time the contribution is made, the primary purpose of the contribution is for it to be applied, within a relatively short period of time, to the direct provision of remuneration of employees (who are employed in that business), then, such a contribution would ordinarily satisfy the nexus of being necessarily incurred in carrying on that business. The Company is carrying on a business and when the Company makes a contribution to the Trustee of the Trust, its primary purpose is for the contribution to be applied to the direct provision of remuneration of its employees in the form of Shares. The advantage sought by the Company relates to the efficient ongoing performance of business. The contribution to the Trust is an employee remuneration cost incurred in carrying on the business for the purpose of deriving assessable income. Paragraph 178 of TR 2014/D1 provides that the Commissioner will generally accept a relatively short period of time for the trustee of an ERT to diminish a contribution for the direct provision of remuneration to employees to be up to five years from the date the contribution was made by an employer to the trustee of an ERT. However, where the contribution has been made to facilitate an employee having an interest in the ERT corresponding to a particular number of shares (or rights to acquire shares) in the employer or in its subsidiaries to which Subdivision 83A-C applies, the statutory scheme is such that a relatively short period of time for these arrangements will generally be accepted as being up to seven years from the date the contribution is made. Currently, the performance period during which the vesting conditions must be satisfied is xx months in respect of all Rights on issue by the Company to eligible employees under the Plan. It is considered that the contribution made under Plan will satisfy the condition that it is to be applied, within a relatively short period of time, to the direct provision of remuneration of employees. Consequently, we consider that the contributions to the Trustee of the Trust by the Company for remunerating its employees under the Plan is an outgoing in carrying on the company's business for the purpose of gaining or producing assessable income. | Detailed Reasoning - Not of a capital nature: Where a contribution satisfies either limb of subsection 8-1(1), it may still be capital or of a capital nature. Pursuant to subsection 8-1(2), the contribution will not be deductible to an employer under section 8-1 to the extent to which it is capital or of a capital nature. Whether an outgoing is capital or revenue in nature can generally be determined by reference to the test articulated by Dixon J in Sun Newspapers Ltd and Associated Newspapers Ltd. v. Federal Commissioner of Taxation (1938) 61 CLR 337; [1938] HCA 73 (Sun Newspapers): There are, I think, three matters to be considered, (a) the character of the advantage sought, and in this its lasting qualities may play a part, (b) the manner in which it is to be used, relied upon or enjoyed, and in this and under the former head recurrence may play its part, and (c) the means adopted to obtain it; that is, by providing a periodical reward or outlay... A contribution to the trustee of an employee share trust is of capital or of a capital nature, where the contribution secures for an employer an asset or advantage of an enduring or lasting nature that is independent of year to year benefits that the employer derives from a loyal and contented workforce. Other advantages obtained by the Company could, however, include that which flows to the Company from enlarging its own equity structure when the Trustee of the Trust acquires the equity interests in the form of shares in the Company. The advantage obtained by the Company, in effect, is a movement of value out of profit or capitalised profit to share capital and therefore a maintenance or enhancement of the capital value of the Company. As this advantage is structural and enduring, it would be of a capital nature. The combined operation of subsections 8-1(1) and 8-1(2) may require apportionment of a loss or outgoing into deductible and non-deductible components, where a single loss or outgoing is incurred for more than one purpose or on items of a differing nature. However, where a contribution is made for the purposes of securing advantages of both, capital and revenue nature, no apportionment is required where the advantages of a capital nature are only expected to be very small or trifling by comparison. Where the primary purpose of the employer in making the contribution is to remunerate employees within a relatively short period of the contribution being made, it is considered that any amount of the contribution attributable to securing a capital structure advantage will only be very small or trifling where the employer: • intends that any direct interest in the employer acquired by the trustee of the employee share trust (for example shares) will be transferred to employees within that relatively short period, and • such shares will not be on-sold to third parties at that time or shortly thereafter. In relation to what is accepted as a 'relatively short time period', paragraph 178 of TR 2014/D1 provides: The Commissioner will generally accept a relatively short period of time for the trustee of an ERT to diminish a contribution for the direct provision of remuneration to employees to be up to five years from the date the contribution was made by an employer to the trustee of an ERT. However, where the contribution has been made to facilitate an employee having an interest in the ERT corresponding to a particular number of shares (or rights to acquire shares) in the employer or in its subsidiaries to which Subdivision 83A-C of the ITAA 1997 applies, the statutory scheme is such that a relatively short period of time for these arrangements will generally be accepted as being up to seven years from the date the contribution is made. On weighing up the facts in this case we consider: • the contributions made by the Company to the Trustee of the ERT are for the purposes of procuring shares to satisfy the Company's commitments arising under the Plan. They are primarily outgoings incurred in the ordinary course of carrying on its business; • the contribution is quickly dissipated in providing Shares (or an interest in Shares) to Participants after the vesting period and performance hurdles are met and the Participant has exercised the Performance Rights as vesting generally occurs after xx months; • the amount of the contribution corresponds closely with the amounts needed to fund the ESS interests and are likely be applied within a xx month vesting period; • Participants will receive absolute entitlement to Shares (direct interest in the employer) post the vesting and exercise period, and • the Plan provides eligible Participants with an opportunity to participate in the future growth and profit of the employer as vesting conditions are linked to performance and retention of eligible employees. Therefore, the contributions made by the Company are not considered capital in nature, or any capital component is sufficiently small or trifling such that the Commissioner would not seek to apportion the deduction. Accordingly, the non-refundable cash contributions made by the Company to the Trustee of the Trust to fund the subscription for or acquisition of Shares by the Company will be deductible by the Company under section 8-1. | Summary: Yes, the deduction for the Company in respect of the irretrievable contributions to the Trust will be allowed in the year of income when the contribution is made to the Trust, provided it is in respect of rights to acquire shares that have previously been granted to employees. | Detailed Reasoning - Detailed reasoning: All references are to the Income Tax Assessment Act 1997 (ITAA 1997) unless otherwise stated. As discussed under question 2, the provision of money to the Trustee of the Trust by the Company for the purpose of remunerating its employees under an ESS is an outgoing in carrying on the employer's business and is deductible under section 8-1. The deduction under section 8-1 would generally be allowable in the income year in which the employer incurred the outgoing but under certain circumstances, the timing of the deduction is specifically determined under section 83A-210. | Detailed Reasoning - Section 83A-210: If: (a) at a particular time, you provide another entity with money or other property: (i) under an arrangement; and (ii) for the purposes of enabling an individual (the ultimate beneficiary ) to acquire, directly or indirectly, an ESS interest under an employee share scheme in relation to the ultimate beneficiary's employment (including past or prospective employment); and (b) that particular time occurs before the time (the acquisition time ) the ultimate beneficiary acquires the ESS interest; then, for the purposes of determining the income year (if any) in which you can deduct an amount in respect of the provision of the money or other property, you are taken to have provided the money or other property at the acquisition time. 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 a Participant under the Plan, in relation to the Participant's employment. The Rights are ESS interests for the purposes of subsection 83A-10(1). Under the Plan, participation by eligible employees (Participants) is upon acceptance of an offer to participate in the Plan that is given to the Participant by the Company. It is the Commissioner's view that at the time that Participants accept the offer to participate in the Plan, the Participants (as ultimate beneficiaries of the ERT) actually acquire Rights to acquire beneficial interests in the taxpayer's shares. This concurs with the view expressed 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 ' (ATO ID 2010/103). The granting of the rights to acquire beneficial interests in the Company Shares, the provision of cash contributions to the Trustee under the arrangement, the acquisition and holding of the shares by the Trustee and the allocation of shares to the Participants are all interrelated components of the employee share scheme. All the components of the scheme must be carried out so that the scheme can operate as intended. As one of those components, the provision of contributions to the Trustee necessarily allows the scheme to proceed. The Company will provide cash contributions to the Trustee of the Trust to enable the Trustee to acquire the Company Shares for the purposes of satisfying the grant of Rights under the Plan. As noted above, the Rights are ESS interests which the Participants will acquire upon being granted them by the Company. The acquisition time for the purposes of section 83A-210 occurs when the Rights to the Shares are granted to the Participants. Accordingly, under section 83A-210, the cash contributions that the Company makes to the Trustee will be deductible in the income year in which the acquisition time arises for the Rights. This concurs with the view expressed in ATO ID 2010/103. Therefore, when the Company makes a cash contribution to the Trustee in an income year before the income year in which the acquisition time for the Rights occurs, it will be allowed a deduction under section 83A-210 in the income year in which the ESS interests (Rights) are granted (acquired). However, section 83A-210 will not apply if the Company makes a cash contribution in an income year that is later than the income year in which the Rights are granted. In this case, the cash contribution will be deductible under section 8-1 in the income year in which the loss or outgoing is incurred i.e. in the later income year. Finally, it should be noted that if any amount of money is used by the Trustee to purchase excess Shares intended to meet a future obligation arising from a future grant of Rights, the excess payment will occur before the employees acquire the relevant Rights (ESS interests) under the scheme. Section 83A-210 will apply in that case and the excess payment will only be deductible to the Company in the year of income when the relevant Rights are subsequently granted to Plan Participants. | Summary: No, the Commissioner will not make a determination under section 177F of Part IVA of the Income Tax Assessment Act 1936 (ITAA 1936) in relation to any part of these arrangements. | Detailed Reasoning - Detailed reasoning: Law Administration Practice Statement PS LA 2005/24 Application of General Anti-avoidance Rules (PSLA 2005/24) deals with the application of the general anti-avoidance rules, including Part IVA of the ITAA 1936. Before the Commissioner can exercise the discretion in respect of Part IVA under subsection 177F(1) of the ITAA 1936, three requirements must be met. These are: • there must be a scheme within the meaning of section 177A of the ITAA 1936; • a tax benefit arises that was obtained or would be obtained in connection with the scheme but for Part IVA; and • having regard to the matters in subsection 177D(2) of the ITAA 1936, the scheme is one to which Part IVA applies. The Scheme A scheme is defined in subsection 177A(1) of the ITAA 1936 which states: (a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; and (b) any scheme, plan, proposal, action, course of action or course of conduct It is considered that this definition is sufficiently wide to cover the proposed employee arrangement under the Plan, which consists of the creation of the Trust, including the Trust Deed, and the payment of the irretrievable contributions to the Trustee. Tax Benefit 'Tax benefit' is defined in subsection 177C(1) of the ITAA 1936 of which the relevant paragraph is: Subject to this section, a reference in this Part to the obtaining by a taxpayer of a tax benefit in connection with a scheme shall be read as a reference to: (b) a deduction being allowable to the taxpayer in relation to a year of income where the whole or a part of that deduction would not have been allowable, or might reasonably be expected not to have been allowable, to the taxpayer in relation to that year of income if the scheme had not been entered into or carried out; In order to determine the tax benefit that would be derived by the Company from this scheme, it is necessary to examine alternative hypotheses or counterfactuals, that is, other schemes the company might reasonably have been expected to enter into to achieve its aims in relation to employee remuneration. If the Company did not enter the scheme and use a Trust, the alternative to the grant of Rights could be payments of salary, bonuses or superannuation contributions to employees. The payments of these additional cash amounts would be deductible under section 8-1 of the ITAA 1997. However, another alternative postulate, it is considered that if the Company issued new shares directly to employees (rather than via the Trust), they may not receive a deduction for the amount incurred in issuing the Shares. Therefore, by using the Trust, a tax benefit is created through the deduction they will receive under section 8-1 of the ITAA 1997 for the irretrievable cash contributions they make to the Trustee. Dominant purpose Subsection 177D(2) of the ITAA 1936 sets out the following factors that must be considered in deciding whether a scheme was entered into for the purpose of obtaining a tax benefit: (i) the manner in which the scheme was entered into or carried out (ii) the form and substance of the scheme (iii) the time at which the scheme was entered into and the length of the period during which the scheme was carried out (iv) the result in relation to the operation of this Act that, but for this Part, would be achieved by the scheme (v) any change in the financial position of the relevant taxpayer that has resulted, will result, or may reasonably be expected to result, from the scheme (vi) any change in the financial position of any person who has, or has had, any connection (whether of a business, family or other nature) with the relevant taxpayer, being a change that has resulted, will result or may reasonably be expected to result, from the scheme (vii) any other consequence for the relevant taxpayer, or for any person referred to in subparagraph (vi), of the scheme having been entered into or carried out (viii) the nature of any connection (whether of a business, family or other nature) between the relevant taxpayer and any person referred to in subparagraph (vi). Subsection 177A(5) of the ITAA 1936 requires the purpose to be the dominant purpose. Therefore in considering whether Part IVA applies or not, the necessary comparison to be made in relation to the factors listed in subsection 177D(2) of the ITAA 1936 is between the scheme as proposed and the relevant counterfactual. A consideration of all the factors referred to in subsection 177D(2) of the ITAA 1936 against the facts of this case leads to the conclusion that the dominant purpose of the scheme is to provide remuneration to the Company's eligible employees who participate in the scheme in a form that promotes the company's business objectives, rather than to obtain a tax benefit. Accordingly, the Commissioner will not make a determination under section 177F of Part IVA of the ITAA 1936 to deny, in part or full, any deduction claimed by the Company in respect of the irretrievable cash contributions made to the Trustee to acquire Shares.