Private ruling: Employee share schemes - reporting obligations
Date of advice: 27 April 2026
Published: 13 July 2026
Ruling period: Income year ending 30 June 20XX

Ruling: Q1: Will a company ( the Company ) have an obligation to provide the Commissioner and Participants with amended employee share scheme ( ESS ) statements under section 392-10 of Schedule 1 to the Taxation Administration Act 1953 ( TAA ) as a result of the sale of its Parent Entity to the Purchaser? | A1: No

Relevant facts and circumstances: Employee Share Option Scheme 1. The Company is an Australian resident private company. 2. The Company is a wholly owned subsidiary of the Parent Entity, which was incorporated and is a resident of Country X. 3. The Company established an Employee Option Scheme ( the Scheme ). The Scheme is operated in accordance with the Company's Scheme Rules ( the Rules ). 4. The Scheme provided for the grant of options to subscribe for shares in the Parent Entity of the Company. 5. Under the Scheme, each eligible employee ( the Participants ) received an individual offer ( Offer Letter ) inviting them to participate in the Scheme. 6. Upon accepting the Offer Letter, theParticipants agreed to be bound by the stipulated terms of the respective grant of options under the Scheme ( the Options ). 7. The Rules and Offer Letter set out, inter alia, the number of Options, vesting conditions, exercise price, exercise conditions and expiry date which applies to the Options granted to each Participant. 8. The Options were subject to disposal restrictions and the 'minimum holding period' requirements as defined in the Rules. 9. The Company and the Scheme intended to qualify to access the start-up concessions in section 83A-33 of the ITAA 1997 10. The Company provided statements for the Options in accordance with section 392-5 of Schedule 1 to the TAA. 11. Apart from subsection 83A-45(4) of the ITAA 1997, all Options granted under the Scheme satisfied the requirements to allow the amount to be included in the Participants' assessable income to be reduced in accordance with section 83A-33 of the ITAA 1997. The Transaction 12. The Purchaser engaged in discussions with the Parent Entity and signed a Share Purchase Agreement ( SPA ) to acquire 100% of the Parent Entity's shares ( Transaction ). 13. Prior to the Transaction, the Options were cancelled. The cancellation of the Options in connection with the SPA fell within 3 years of the grant of some of the Options under the Scheme.

Relevant legislative provisions: Section 392-5 of Schedule 1 to the TAA | Subsection 392-5(1) of Schedule 1 to the TAA | Subsection 392-5(2) of Schedule 1 to the TAA | Subsection 392-5(3) of Schedule 1 to the TAA | Section 392-10 of Schedule 1 to the TAA | Subdivision 83A-B of the ITAA 1997 | Subsection 83A-25(1) of the ITAA 1997 | Subsection 83A-33(1) of the ITAA 1997 | Section 83A-45 of the ITAA 1997 | Subsection 83A-45(4) of the ITAA 1997 | Subsection 83A-45(5) of the ITAA 1997 | Subparagraphs 83A-45(5)(a)(i) of the ITAA 1997 | Subparagraphs 83A-45(5)(a)(ii) of the ITAA 1997

Reasons for decision: Summary: All legislative references are to Schedule 1 to the Taxation Administration Act 1953 unless otherwise specified. | Detailed Reasoning - ESS reporting requirements: 14. Subsection 392-5(1) imposes reporting obligations on a company that provides ESS interests to an individual, where Subdivision 83A-B of the ITAA 1997 applies to the ESS interests. 15. Under the Rules, the Company provided Options to Participants at a discount which were taxed under Subdivision 83A-B of the ITAA 1997 and as such, the Company had a reporting obligation under section 392-5. 16. Participants were entitled to reduce the amount of the discount included in their assessable income as all of the requirements in subsection 83A-33(1) of the ITAA 1997 were satisfied. 17. Accordingly, the Company provided statements for the Options in accordance with section 392-5, which specified details of the acquisition of options acquired under the start-up concessions. | Detailed Reasoning - Amendments to ESS statements: 18. If a company becomes aware of any material change to or omission from any information given to the Commissioner or to the individual under Division 392, then it is required to advise the Commissioner or the individual, as applicable, of the change or provide the omitted information to the Commissioner or to the individual, as applicable, under section 392-10. 19. In this case, as part of the Transaction, all issued Options were cancelled or exercised in their entirety and the Transaction was completed when all the shares in the Parent Entity were acquired by the Purchaser. 20. As such, it is necessary to determine whether this constitutes a material change to the statements provided under section 392-5 resulting in the Company having an obligation under section 392-10 to make an amendment to the section 392-5 statements previously provided. 21. As such, it is necessary to determine whether this constitute a material change or omission to the statements provided under section 392-5, resulting in the Company having an obligation under section 392-10 to make an amendment to the section 392-5 statements previously provided. | Detailed Reasoning - Minimum holding period: 22. Amongst the conditions that must be met for section 83A-33 of the ITAA 1997 to operate, are those contained in section 83A-45. Apart from subsection 83A-45(4) of the ITAA 1997, all Options granted under the Scheme satisfied the requirements to allow the amount to be included in assessable income to be reduced in accordance with subsection 83A-33(1) of the ITAA 1997. 23. The minimum holding period provisions are detailed in subsections 83A-45(4) and (5) of the ITAA 1997. Minimum holding period | Detailed Reasoning - 83A-45(4): This subsection applies to an *ESS interest you acquire under an *employee share scheme if, at all times during the interest's *minimum holding period, the scheme is operated so that every acquirer of an ESS interest (the scheme interest ) under the scheme is not permitted to dispose of: (a) the scheme interest; or (b) a beneficial interest in a *share acquired as a result of the scheme interest; during the scheme interest's minimum holding period. | Detailed Reasoning - 83A-45(5): An *ESS interest's minimum holding period is the period starting when the interest is acquired under the *employee share scheme and ending at the earlier of: (a) 3 years later, or such earlier time as the Commissioner allows if the Commissioner is satisfied that: (i) the operators of the scheme intended for subsection (4) to apply to the interest during the 3 years after that acquisition of the interest; and (ii) at the earlier time that the Commissioner allows, all *membership interests in the relevant company were disposed of under a particular *scheme; and (b) when the acquirer of the interest ceases being employed by the relevant employer. * denotes a term defined in section 995-1 of the Income Tax Assessment Act 1997. 24. Given that all of the Parent Entity shares were acquired by the Purchaser as part of the Transaction, the remaining consideration is whether the operators of the Scheme intended for subsection 83A-45(4) of the ITAA 1997 to apply to the ESS interests during the three years after the Options were granted to participants. 25. This test would be failed if the operators of the Scheme had either: a. Allowed participants to dispose of their interests prior to the end of their minimum holding period, or b. There was objective evidence that the scheme was not operated to prevent the participants from doing so. 26. Accordingly, the Commissioner will consider whether to exercise his discretion under subsection 83A-45(5) of the ITAA 1997 to allow the minimum holding period for the Options to be reduced. 27. The Rules in conjunction with the conditions in the Offer Letter, restrict the disposal of Options during the three year minimum holding period, in accordance with the requirement in subsections 83A-45(4) and (5) of the ITAA 1997, and there is no evidence that any such disposal has been allowed at an earlier time. Therefore, there is objective evidence that the Scheme operated to prevent the Participants from disposing of their interests before the end of the minimum holding period. 28. If Options were issued after the time that it became clear that the Transaction was imminent, the Commissioner would not accept that the Scheme operated to prevent the Participants from disposing of their interests before the end of the minimum holding period. In this situation no Options were issued after discussions commenced with the Purchaser. 29. Having considered these current facts and circumstances, the Commissioner finds the requirements of subparagraphs 83A-45(5)(a)(i) and (ii) of the ITAA 1997 to be satisfied allowing for the minimum holding period for the Options that qualify for concessional treatment under section 83A-33 of the ITAA 1997 to end at an earlier time when the Options were cancelled. | Detailed Reasoning - Conclusion: 30. At the time of the Transaction, all Options granted under the Scheme satisfied the requirements to allow the amount to be included in the assessable income to be reduced in accordance with subsection 83A-33(1) of the ITAA 1997. 31. As such, the Commissioner is satisfied that there will have been no material changes or material omissions to the statements provided under section 392-5 and the Company will not have an obligation under section 392-10 to make an amendment to the section 392-5 statements that were previously provided.