Private ruling: Employee share trust
Date of advice: 11 September 2025
Published: 17 November 2025
Ruling period: DD MM YYYY to DD MM YYYY
Date scheme commenced: In a particular income year

Ruling: Q1: Will Company A (as head company of the Company A tax consolidated 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 or any subsidiary member of the Company A consolidated group to the Trustee of the Company A Employee Share Trust (Trust) to fund the on-market subscription for or acquisition of Company A shares by the Trust? | A4: Yes | Q2: Will irretrievable cash contributions made by Company A or any subsidiary member of the Company A tax consolidated group to the Trustee, to fund the subscription for or acquisition of Company A shares by the Trust, be deductible to Company A at a time determined by section 83A-210 of the ITAA 1997 where contributions are made before the acquisition of the relevant ESS interests? | A5: Yes | Q3: If the Trust satisfies its obligation under the Plans by subscribing for new shares in Company A, will the subscription proceeds be included in the assessable income of Company A under section 6-5 or section 20-20 of the ITAA 1997 or trigger a capital gains tax even under Division 104 of the ITAA 1997? | A6: No | 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 full, any deduction claimed by Company A as head company of the tax consolidated group in respect of the irretrievable cash contributions made by Company A or any subsidiary member of the tax consolidated group to the Trustee to fund the subscription for or acquisition on-market of Company A shares by the Trust? | A7: No Issue 2: Fringe Benefit Tax | Q5: Will the provision of the Performance or Share Rights by Company A to employees of Company A under the Plans be a fringe benefit within the meaning of subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A8: No | Q6: Will the irretrievable cash contributions made by Company A or any subsidiary of Company A to the Trustee, to fund the subscription for or acquisition on-market of Company A shares, be treated as a fringe benefit within the meaning of section 136(1) of the FBTAA? | A9: No | Q7: Will the Commissioner seek to make a determination that section 67 of the FBTAA applies to increase the fringe benefits taxable amount to the Employer Entities, by the amount of tax benefit gained from irretrievable cash contributions made by Company A to the Trustee, to fund the subscription for or acquisition on-market of Company A shares? | A10: No

Relevant facts and circumstances: Background 1. Company A is a company carrying on a business in Australia. 2. Company A has a remuneration strategy which offers an incentive program to eligible personnel whereby they receive shares in Company A upon the satisfaction of certain performance conditions. This encompasses an incentive framework that includes a Short-Term Incentives Program (STIP) and Long-Term Incentive Program (LTIP). These programs are implemented through the Plans. 3. Company A employees are all based in Australia and Company A only has operations in Australia. The Plans 4. The Plans comprise a Performance Rights Plan and Share Rights Plan. Essentially, the key terms of conditions of both plans are outlined below: • The Board will determine the commencement date of the Plans and eligibility for the participating in the Plans. • Eligible Employees (referred to as Participants), upon being issued an Offer by the Board, can apply for up to a specified number of Performance or Share Rights which vest according to the Vesting Conditions (which may include performance criteria as determined by the Board in its discretion). • By accepting an Offer, the Participant will be taken to have agreed to become a Participant bound by the Plan Rules, and to have irrevocably offered to acquire the Performance or Share Rights (and the Shares upon the conversion of Performance or Share Rights) the subject of the Offer under (and subject to) the Plan rules and on (and subject to) the terms and conditions of the Offer (Rule X). • A Participant has no right or interest unless and until the Performance or Share Right is converted and the Share is issued. Furthermore, the holder of a Performance or Share Right does not have any rights to dividends, rights to vote or rights to the capital of Company A as a Shareholder as a result of holding a Performance or Share Right (Rule X). • A Share issued on conversion of a Share or Performance Right will rank equally in all respects with Shares already on issue on the date of issue of the Shares, except for entitlements which had a record date before the date of issue of that Share (Rule X). • A Performance or Share Right will lapse on the earlier of: - The Board determining that any Vesting Condition has not been satisfied and is not capable of being satisfied (and the Board does not exercise its discretion to adjust or vary the Vesting Condition); - The day immediately following the last day of the Conversion Period (Rule X); or - The share right lapsing because a Participant is considered a Bad Leaver (defined in Schedule) (Rules X) 5. Performance Right means a conditional right granted to a Participant under the Plan to receive a Share, subject to the terms of the Offer and the PRP Rules (per Dictionary at Schedule of the PRP Rules). 6. Share Right means a conditional right granted to a Participant under the Plan to receive a Share, subject to the terms of the Offer and the SRP rules (per Dictionary at Schedule of the SRP Rules). Employee Share Trust 7. The Trust was established for the sole purpose of obtaining shares for the benefit of employees of Company A. 8. The Trust Deed was executed on DD MM YYYY. The parties to the Trust Deed are Company A and the Trustee. 9. The Trustee is an external trustee acting in an independent capacity on behalf of the beneficiaries of the Trust. 10. Broadly the Trust operates as follows: • The Trust is established for the sole purpose of subscribing for, acquiring, holding and transferring Shares in connection with the Plans for the benefit of the Participants. • The Trust may be funded from time to time by contributions from Company A or a member of the Company A Group (i.e. for the subscription or purchase of shares in accordance with the Plans) as specified in Clause X of the Trust Deed. • All funds provided to the Trustee under clause X will constitute Accretions to the corpus of the Trust and will not be repayable by the Trustee and may be repaid to Company A as consideration for the subscription of Shares provided such Shares are held under the terms of the Deed (Clause X of the Trust Deed). • Company A or a member of the Company A Group contribute funds, by way of capital contributions to the Trust when written notice (Dealing Notice) is provided by the Board to the Trustee. A Dealing Notice can be issued from time to time, however, typically are issued when the incentives vest to the Participant and are subsequently exercised or converted by the Participant into resulting Shares. • These funds will be used by the Trustee of the Trust to acquire the Shares either by on-market purchase or via a subscription for new Shares based on the Dealing Notice provided by Company A (Clause X of the Trust Deed). • Upon being directed by the Board, the Trustee must allocate the specified number of Shares to the specified Participant, on the date as directed by the Board (Clause X of the Trust Deed). The Participant will become the beneficial owner of the allocated shares (Allocated Shares). • The Trustee will hold any and all Allocated Shares held on behalf of the Participant under the terms of the relevant Plan and agrees that the Participant will be the beneficial owner of and absolutely entitled to these shares (Clause X of the Trust Deed). The Trustee also holds on behalf of, and the Participant is entitled to, all other benefits and privileges attached to or resulting from the Allocated Shares (Clause X of the Trust Deed). • Subject to the Trust Deed, the Plan rules and Applicable Law, the Trustee in its reasonable discretion has the power to do all things a trustee is permitted to do by law in respect of the Trust, the Trust Shares and the Trust Assets (Clause X of the Trust Deed). The Trustee's activities as trustee of the Trust will be limited to the Plans (Clause X of the Trust Deed). • The Trustee must deal with each Unallocated Share (including any bonus shares or other Accretions in respect of such Unallocated Share) in the manner set out in a Dealing Notice (Clause X of the Trust Deed). • The Board may from time to time specify that certain Unallocated shares are to be held by the Trustee for a particular Plan or a particular Participant (Specified Unallocated Shares). To avoid doubt, an instruction to hold an Unallocated Share as a Specified Unallocated Share does not, in and of itself, result in that Share becoming an Allocated Share (Clause X of the Trust Deed). • Participants may by written notice (Withdrawal Notice) request that their Allocated Shares be transferred to them (i.e. legal title) or to a third party nominated Participant after any applicable restrictions on dealing with or withdrawal of the Allocated Shares (as set out in the terms of the Plans or the terms of their participation in those Plans) have lifted (Clause X of the Trust Deed). Costs 11. Company A will incur the following costs in relation to the ongoing administration of the Trust: 12. Company A will incur the following costs in relation to the establishment and implementation of the Trust: 13. Company A will also incur various costs relating to tax advice associated with the implementation of the Trust including taxation fees associated with the drafting and lodgement of the private ruling application with the ATO.

Relevant legislative provisions: Income Tax Assessment Act 1936 Part IVA | Income Tax Assessment Act 1936 subsection 177D(2) | Income Tax Assessment Act 1936 section 177F | Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 subsection 6-5(1) | Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 subsection 8-1(1) | Income Tax Assessment Act 1997 subsection 8-1(2) | Income Tax Assessment Act 1997 paragraph 8-1(2)(a) | Income Tax Assessment Act 1997 section 8-10 | Income Tax Assessment Act 1997 Division 12 | Income Tax Assessment Act 1997 section 20-20 | Income Tax Assessment Act 1997 section 20-30 | Income Tax Assessment Act 1997 section 25-5 | Income Tax Assessment Act 1997 subsection 25-5(1) | Income Tax Assessment Act 1997 section 40-880 | Income Tax Assessment Act 1997 subsection 40-880(3) | Income Tax Assessment Act 1997 subsection 40-880(4) | Income Tax Assessment Act 1997 subsection 40-880(9) | Income Tax Assessment Act 1997 Division 83A | Income Tax Assessment Act 1997 subsection 83A-10(1) | Income Tax Assessment Act 1997 paragraph 83A-10(1)(b) | Income Tax Assessment Act 1997 subsection 83A-10(2) | Income Tax Assessment Act 1997 Subdivision 83A-B | Income Tax Assessment Act 1997 subsection 83A-20(1) | Income Tax Assessment Act 1997 Subdivision 83A-C | Income Tax Assessment Act 1997 section 83A-210 | Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 Division 104 | Income Tax Assessment Act 1997 paragraph 104-35(5)(c) | Income Tax Assessment Act 1997 paragraph 104-155(5)(c) | 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 974-75(1) | Fringe Benefits Tax Assessment Act 1986 section 66 | Fringe Benefits Tax Assessment Act 1986 section 67 | Fringe Benefits Tax Assessment Act 1986 subsection 67(1) | 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: All legislative references in these reasons are to the Income Tax Assessment Act 1997 unless otherwise specified. | Summary: Company A (as head company of the Company A tax consolidated group) will obtain an income tax deduction, pursuant to section 8-1 in respect of the irretrievable cash contributions made by Company A or any subsidiary member of the Company A consolidated group to the Trustee of the Trust to fund the on-market subscription for or acquisition of Company A shares by the Trust. | Detailed Reasoning - Detailed reasoning: Subsection 8-1(1) allows 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, under 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 is a company carrying on a business in Australia. Company A has a remuneration strategy which offers an incentive program to eligible personnel whereby they receive shares in Company A upon the satisfaction of certain performance conditions. Incurred in carrying on a business Company A must provide the Trustee with the funds required to enable the Trustee to subscribe for, or acquire, Company A shares. The contributions made by Company A to the Trustee are irretrievable as: The irretrievable cash contributions by Company A to the Trust for the acquisition of Company A shares to satisfy grants of ESS interests are part of an ongoing series of payments in the nature of remuneration of its employees. Therefore, subsection 8-1(1) is satisfied. Not capital or of a capital nature The costs will be an outgoing incurred for periodic funding of an employee share scheme (ESS) for employees. Costs incurred are likely to be in relation to more than one grant of Company A shares, and contributions will be made on a regular basis as part of the ongoing process of remunerating Participants and the Trust is expected to acquire Company A shares periodically. This indicates that the irretrievable cash contributions to the Trust are ongoing in nature and are part of the broader remuneration expenditure for Company A. While the irretrievable cash 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 comparatively small. Therefore, the payments are not capital, or of a capital nature, and paragraph 8-1(2)(a) is not satisfied. Accordingly, the irretrievable cash contributions made by Company A will be deductible under section 8-1. | Summary: Company A as head company of the Company A tax consolidated group will obtain an income tax deduction, pursuant to section 8-1, for costs incurred by Company A or any subsidiary member of the Company A tax consolidated group in relation to ongoing administration of the Trust. | Detailed Reasoning - Detailed reasoning: As discussed above in Question 1, section 8-1 allows a deduction for all losses and outgoings to the extent they are necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income, except where the outgoings are of a capital nature. Company A will incur on-going administration costs associated with the services provided by the Trustee in respect of the Plans which are set out in the facts and circumstances. These costs are of an on-going nature that are not separately deductible under a more specific income tax provision. It is noted that the ongoing administration costs do not include any establishment or amendment costs. Therefore, Company A's ongoing costs incurred in relation to the administration of the Trust are necessarily incurred in carrying on its business for the purpose of producing its assessable income. Furthermore, the costs are not capital in nature given the advantage sought by the costs are not to add to its profit-making structure, the expenses are regular and recurrent, and their essential character is that of a working expense of the business. Accordingly, costs incurred by Company A in relation to the on-going administration of the Trust will be deductible under section 8-1 (see also, Taxation Determination TD 2022/8 Income Tax: deductibility of expenses incurred in establishing and administering an employee share scheme ). | Summary: Company A as head company of the Company A tax consolidated group will obtain an income tax deduction, pursuant to section 40-880, for costs incurred by Company A or any subsidiary member of the Company A tax consolidated group in relation to the establishment and implementation of the Trust. | Detailed Reasoning - Detailed reasoning: Establishment expenses are outgoings associated with the creation of an ESS and include fees and start-up costs incurred in establishing the Trust and ESS plan rules. Company A will incur establishment and implementation costs as defined in the relevant facts and circumstances. Section 40-880 allows deductions for certain business capital expenditure that fall outside the scope of the deduction provisions of the income tax law. It requires the expenditure to be capital in nature and in relation to a business that is, was or is proposed to be carried on for a taxable purpose. Costs incurred in relation to the establishment and implementation of the Trust are capital in nature and are incurred in relation to Company A's business as the expenditure relates to remuneration of employees of Company A. Section 40-880 contains limitations and exceptions in subsections 40-880(3) to (9) which may prevent a deduction being allowed. Subsection 40-880(3) provides that the expenditure is only deductible to the extent that the business is carried on for a taxable purpose. It is clear that the business of Company A is carried on for a taxable purpose. Similarly, the other limitations and exceptions in subsections 40-880(4) to (9) do not prevent the expenses from being deductible under section 40-880. Therefore, costs incurred by Company A in relation to the establishment and implementation of the Trust will be deductible in equal proportions over five years under section 40-880 (Taxation Determination TD 2022/8 Income tax: deductibility of expenses incurred in establishing and administering an employee share scheme). | Summary: Company A as head company of the Company A tax consolidated group will obtain an income tax deduction, pursuant to section 25-5, for costs incurred by Company A or any subsidiary member of the Company A tax consolidated group in relation to managing tax affairs of the Trust. | Detailed Reasoning - Detailed reasoning: Company A will incur costs in managing the tax affairs of the Trust as defined in the relevant facts and circumstances, which include taxation fees associated with the drafting and lodgement of the private ruling application with the ATO. Section 8-10 states that if more than one provision applies, the most appropriate provision should be used. Division 12 sets out particular types of deductions that are dealt with by a specific provision of either the ITAA 1936 or the ITAA 1997. Section 25-5 is such a provision listed in Division 12 dealing with tax-related expenses, such as managing a taxpayer's tax affairs (subsection 25-5(1)). To the extent Company A incurs costs in managing the tax affairs of the Trust, including costs associated with the drafting and lodgement of the private ruling application in relation to the Trust's tax affairs, these tax-related costs are deductible by Company A under subsection 25-5(1). | Summary: The irretrievable cash contributions made by Company A (or any subsidiary member of the Company A tax consolidated group) to the Trustee, to fund the subscription for, or acquisition on-market of, Company A shares by the Trust will be deductible to Company A at a time determined by section 83A-210 where contributions are made before the acquisition of the relevant ESS interests. | Detailed Reasoning - Detailed reasoning: An ESS interest in a company is defined in subsection 83A-10(1) as either a beneficial interest in a share in the company, or a beneficial interest in a right to acquire a beneficial interest in a share in the company. Company A shares that are purchased by the Trustee, and subsequently granted to Participants pursuant to the Plans, are ESS interests for the purposes of section 83A-210. The Plans satisfy the definition of an 'employee share scheme' for the purposes of subsection 83A-10(2) as it is a scheme under which ESS interests are provided to the Participants in relation to their employment. The granting of the ESS interest to the Participants, the provision of the cash contributions to the Trustee, the acquisition and holding of Company A shares by the Trustee and the allocation of Company A shares to Participants are all interrelated components of the Plans. All the components constitute an arrangement for the purposes of section 83A-210 that must be carried out so that the scheme can operate as intended. Section 83A-210 applies to determine the timing of the deduction of contributions provided under an ESS arrangement, but only if the contribution to the Trust is made before the ESS interest is acquired by the ultimate beneficiary under the ESS in the particular year of income. The effect of section 83A-210 is to deem the time an employer incurred the outgoing to be the time the ESS interest is acquired by the beneficiary, rather than the time the employer makes the contribution to the trust, (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) . Therefore, where irretrievable cash contributions are made at a time before the Participants acquire the relevant ESS interest, section 83A-210 will apply (retrospectively) to modify the timing of the deduction claimed under section 8-1 to be the income year in which Participants originally acquired the Rights. | Summary: If the Trust satisfies its obligation under the Plans by subscribing for new shares in Company A, 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 - Detailed reasoning: Section 6-5 Section 6-5 provides that a taxpayer's assessable income includes income according to ordinary concepts. The term 'income according to ordinary concepts' is not a defined term. However, case law has identified certain factors to be taken into consideration. The characterisation of the subscription proceeds received by Company A from the Trust can be determined by the character of the right or thing disposed of in exchange for the subscription proceeds ( GP International Pipecoaters v. Federal Commissioner of Taxation [1990] HCA 25). Where Company A issues the Trust with new shares in itself, the character of the newly issued share is one of capital. Therefore, the receipt of the subscription proceeds takes the character of share capital, which is of a capital nature. Accordingly, the subscription proceeds should not be treated as ordinary income assessable in the hands of Company A under section 6-5. Section 20-20 Section 20-20 relevantly provides for the assessment of recoupments received by way of insurance or indemnity, or if it is a recoupment of a loss or outgoing that is deductible because of a provision listed in the table in section 20-30. The subscription proceeds received by Company A from the Trust would not represent an amount received by way of insurance or indemnity as there is no insurance contract and the receipt does not arise because of a statutory or contractual right of indemnity nor in the nature of compensation. None of the provisions listed in section 20-30 are relevant to a receipt of subscription proceeds. Therefore, the subscription proceeds received by Company A from the Trust does not constitute an assessable recoupment under section 20-20. Division 104 A capital receipt will only be included as an assessable net capital gain if it arises as a result of a CGT event (section 102-20). The only CGT events that may have possible application to the receipt of the subscription proceeds are CGT event D1 (Creating a contractual or other rights) and/or CGT event H2 (Receipt for event relating to a CGT asset). However, paragraphs 104-35(5)(c) and 104-155(5)(c) respectively provide that CGT event D1 and CGT event H2 do not apply if a company issues or allots equity interests or non-equity shares in the company. As the shares constitute 'equity interests' (per subsection 974-75(1)), neither CGT event D1 nor CGT event H2 will occur. Accordingly, the subscription proceeds will not be assessable as a capital gain to Company A under Division 104. | Summary: The Commissioner will not seek to make a determination that Part IVA of the ITAA 1936 applies to deny, in part or full, any deduction claimed by Company A as head company of the tax consolidated group in respect of the irretrievable cash contributions made by Company A or any subsidiary member of the tax consolidated group to the Trustee to fund the subscription for or acquisition on-market of Company A shares by the Trust. | Detailed Reasoning - Detailed reasoning: Part IVA of the 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 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 Company A to obtain a tax benefit. | Summary: The provision of Performance or Share Rights by Company A to employees of Company A under the Plans will not be a fringe benefit within the meaning of subsection 136(1) of the FBTAA. | Detailed Reasoning - Detailed reasoning: An employer's liability to fringe benefits tax (FBT) arises under section 66 of the 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 definition. 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 Plans constitutes an ESS within the meaning of subsection 83A-10(2) because it is a scheme under which ESS interests in Company A are provided to employees in relation to their employment. As the Performance or Share Rights granted under the Plan will be acquired by the employees at a discount, they are ESS interests to which Subdivision 83A-B or 83A-C applies. Accordingly, the provision of Performance or Share Rights will not be subject to FBT as they are excluded from being a fringe benefit by virtue of paragraph 136(1)(h) of the FBTAA. In addition, when the Performance or Share 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 to acquire shares and not in respect of employment (refer to ATO ID 2010/219 Fringe Benefits Tax Fringe benefit: shares provided to employees upon exercise of rights granted under an employee share scheme ). | Summary: The irretrievable cash contributions made by Company A or any subsidiary of Company A to the Trustee, to fund the subscription for or acquisition on-market of Company A shares will not be treated as a fringe benefit within the meaning of section 136(1) of the FBTAA. | Detailed Reasoning - Detailed reasoning: As discussed in Question 6, a 'fringe benefit' is defined in subsection 136(1) of the FBTAA where certain benefits are excluded by virtue of paragraphs (f) to (s) of the 'fringe benefit' definition. In particular, paragraph (ha) of the 'fringe benefit' definition excludes a benefit constituted by the acquisition of money or property by an employee share trust within the meaning of subsection 130-85(4). 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 are relevant. To qualify as an employee share trust, a trustee's activities must be limited to: • obtaining shares or rights in a company (paragraph 130-85(4)(a)) • ensuring that ESS interests in the company that are beneficial interests in those shares or rights are provided under the ESS to employees, or to associates of employees, of the company or a subsidiary of the company (paragraph 130-85(4)(b)) • other activities that are merely incidental to the activities mentioned in paragraphs 130-85(4)(a) and (b) (paragraph 130-85(4)(c)). The Plans are ESS as a Performance or Share Right granted under the Plans is an ESS interest under subsection 83A-10(1), being a beneficial interest in either a share in a company or a right to acquire a share in a company. Shares are an ESS interest to which Subdivision 83A-B or 83A-C applies because a Participant acquires the ESS interest under an ESS for nil consideration, which is at a discount. Accordingly, paragraphs 130-85(4)(a) and (b) are satisfied. 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 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'? In the present case, the objects of the Trust are for the sole purpose of undertaking activities that are in line with the definition of an employee share trust under subsection 130-85(4), including paragraph 130-85(4)(c). The other activities undertaken by the Trustee are merely incidental to managing the Plans. Therefore, the irretrievable cash contributions made by Company A to the Trustee to fund the subscription for or acquisition on-market of Company A shares will not be a fringe benefit. | Summary: The Commissioner will not seek to make a determination that section 67 of the FBTAA applies to increase the fringe benefits taxable amount to the Employer Entities by the amount of tax benefit gained from irretrievable cash contributions made by Company A to the Trustee, to fund the subscription for or acquisition on-market of Company A shares. | Detailed Reasoning - Detailed reasoning: Section 67 involves arrangements to avoid or reduce FBT. Essentially, it is the general anti-avoidance provision in the FBTAA and its operation is comparable to Part IVA of the ITAA 1936, in that the section requires the identification of an 'arrangement' and a 'tax benefit', includes a sole or dominant purpose test, and is activated by the making of a determination by the Commissioner. As determined above, the irretrievable cash contributions made by Company A to the Trustee do not constitute fringe benefits within the meaning of subsection 136(1) of the FBTAA, nor would the grant of ESS interests to Participants under the Plans if the Trust was not used. Therefore, the fringe benefits liability is not any less than it would have been but for the existence of the arrangement (i.e., the Trust). Therefore, the Commissioner will not seek to make a determination that section 67 of the FBTAA applies to increase the fringe benefits taxable amount to the Employer Entities by the amount of tax benefit gained from irretrievable cash contributions made by Company A to the Trustee to fund the subscription for or acquisition on-market of Company A shares.

Question 2A: Will Company A as head company of the Company A tax consolidated group obtain an income tax deduction, pursuant to section 8-1 of the ITAA 1997, for costs incurred by Company A or any subsidiary member of the Company A tax consolidated group in relation to ongoing administration of the Trust? | Question 2B: Will Company A as head company of the Company A tax consolidated group obtain an income tax deduction, pursuant to section 40-880 of the ITAA 1997, for costs incurred by Company A or any subsidiary member of the Company A tax consolidated group in relation to the establishment and implementation of the Trust? | Question 2C: Will Company A as head company of the Company A tax consolidated group obtain an income tax deduction, pursuant to section 25-5 of the ITAA 1997, for costs incurred by Company A or any subsidiary member of the Company A tax consolidated group in relation to managing tax affairs of the Trust? | Employee plan record keeping; | Production and dispatch of holding statements to employees; | Provision of annual income tax return information for employees; | Costs incurred in the acquisition of shares on market (e.g. brokerage costs and the allocation of such shares to Participants); | Management of employee termination; and | Other trustee expenses such as the annual audit of the financial statements and annual income tax return of the Trust. | Legal advice obtained in respect of the implications which may arise for both Company A and the Participants of the Plans in respect of the Trust structure; | Legal documents required in respect of the Trust and the Plans; | Legal advice obtained in respect of the drafting of changes required to the existing Plans in order to accommodate the Trust structure; and | Professional fees associated with the establishment of the Trust including such costs associated with the creating and registration of the Trust with various authorities. | all funds received by the Trustee from Company A will form part of the corpus of the Trust and will not be repaid to Company A | nothing in the Trust Deed confers, or is intended to confer, on Company A any proprietary right or proprietary interest in the Company A shares acquired by the Trustee.