Class Ruling CR 2003/16


Class of entities or scheme: 3. The class of persons to which this Ruling applies are all Australian resident employees of Australia and New Zealand Banking Group Limited and their subsidiaries (the 'Bank') who participated in the exemption scheme of the ANZ Employee Share Acquisition Plan (the Plan). | Qualifications: 4. The Commissioner makes this Ruling based on the precise arrangement identified in this Ruling. 5. The class of persons defined in this Ruling may rely on its contents provided the arrangement actually carried out is carried out in accordance with the arrangement described below at paragraphs 9 and 10 in this Ruling. 6. If the arrangement actually carried out is materially different from the arrangement that is described in this Ruling: 7. This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to: 8. This Ruling applies from the 2002/2003 year of income. However, the Ruling does not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Ruling (see paragraphs 21 to 22 of Taxation Ruling TR 92/20). Furthermore, the Ruling only applies to the extent that: 9. The arrangement that is the subject of the Ruling is described below. This description is based on the following documents. These documents, or relevant parts of them, as the case may be, form part of and are to be read with this description. 10. The following is a brief description of how the Plan works: | Where the employee makes an election: 11. Where a participating employee acquires shares under the Plan and makes an election under section 139E, the discount on the shares will be included in assessable income in the year of income in which the shares are acquired pursuant to subsection 139B(2). 12. The discount will be calculated in accordance with subsection 139CC(2). The discount is the market value of the share at the time it is acquired. As the exemption conditions in section 139CE have been satisfied in relation to the shares acquired by the employees the discount so calculated is subject to reduction pursuant to section 139BA. Only the amount of discount greater than $1,000 will be included in assessable income. | Where the employee does not make an election: 13. Where a participating employee acquires shares under the Plan and does not make an election under section 139E, the amount of discount on the shares will be included in assessable income pursuant to subsection 139B(3) in the year of income in which subsection 139CA(2) determines the cessation time occurs. 14. Where the participating employee disposes of the shares in an arm's length transaction within 30 days of the cessation time, the discount assessable at the cessation time under subsection 139B(3) will be calculated in accordance with subsection 139CC(3). It will be the consideration received on the disposal. 15. A capital gain or capital loss made as a consequence of such a disposal will be disregarded pursuant to subsection 130-83(2). 16. Shares that are not disposed of by the employee in an arm's length transaction within 30 days of the cessation time, will have the discount calculated in accordance with subsection 139CC(4). The discount will be the market value of the share at the cessation time worked out under section 139FA. 17. The first element of the cost base of the shares upon a capital gains tax event occurring will be their market value at the cessation time pursuant to subsection 130-83(3). 18. Employees will acquire shares under an 'employee share scheme' for the purposes of Division 13A upon issue of shares to ANZEST under the exemption scheme. 19. An employee acquires a beneficial interest in the shares allocated to them but held in trust on their behalf under paragraph 139(G)(e). 20. The shares acquired under the exemption scheme will be 'qualifying shares' for the purposes of section 139CD(1). | Where the employee makes an election: 21. An employee can elect under section 139E that subsection 139B(2) applies for a year of income. The election will apply to each qualifying share acquired by the employee in the year of income. Subsection 139B(2) provides that the discount is included in the taxpayer's assessable income in the year of acquisition of the share, that is, in the year when ANZEST is allocated the share for the benefit of the employee. 22. The discount is calculated in accordance with subsection 139CC(2). As the employee does not provide any consideration for the acquisition of the share the discount is the market value of the share, determined by section 139FA, when it was acquired by the employee. The market value of an ordinary share under section 139FA is: 23. Section 139CE contains three exemption conditions: The scheme as outlined satisfies the exemption conditions in section 139CE. Therefore subsection 139BA(2) will apply so that only the discount greater than $1,000 will be included in the employee's assessable income. 24. The first element of the cost base of the shares for the purposes of the capital gains tax provisions will be determined in accordance with subsection 130-80(2). No advice is provided on the operation of this provision as it is currently subject to a retrospective legislative amendment contained in Taxation Laws Amendment Bill (No. 8) of 2002. | Where the employee does not make an election: 25. Where a participating employee has not made an election under section 139E, as the shares are qualifying shares, the discount in relation to the shares will be included in assessable income pursuant to subsection 139B(3), in the year in which cessation time occurs. As the shares acquired under the plan will have restrictions on their disposal, ie. an employee will be prohibited from disposing of the shares for the first 3 years after acquisition, subsection 139CA(2) will determine when cessation time occurs. 26. Under the plan, cessation time will be the earliest of: cease to have effect. As set out in the Plan Rules this will be the earlier of three years after an employee acquires a beneficial interest in the share; and 27. Subsection 139CC(3) calculates the discount to be included in assessable income where the shares are disposed of by the employee in an arm's length transaction within 30 days of the cessation time. As no consideration has been given by the employee for the shares, the entire proceeds received by the employee on disposal will represent the discount to be included in assessable income. 28. As the share is a qualifying share and no election was made under section 139E for the year of income that the share was acquired, a capital gain or loss made on the disposal will be disregarded in accordance with subsection 130-83(2). 29. Shares that are not disposed of by the employee in an arm's length transaction within 30 days of cessation time will have the discount to be included in assessable income calculated in accordance with subsection 139CC(4). As no consideration has been given by the employee for the shares, the discount is the market value of the shares at cessation time. 30. As the shares in the Bank are listed on an approved stock exchange the market value of the shares for the purposes of paragraph 139CC(4)(a) will be determined in accordance with section 139FA, see paragraph 22. 31. The cost base of the shares for the purposes of the capital gains tax provisions will be determined in accordance with subsection 130-83(3), the first element being the market value of the shares worked out under section 139FA at cessation time. 32. Below is a detailed contents list for this Class Ruling: Commissioner of Taxation 12 March 2003 Not previously issued in draft form.

Ruling: Where the employee makes an election: 11. Where a participating employee acquires shares under the Plan and makes an election under section 139E, the discount on the shares will be included in assessable income in the year of income in which the shares are acquired pursuant to subsection 139B(2). 12. The discount will be calculated in accordance with subsection 139CC(2). The discount is the market value of the share at the time it is acquired. As the exemption conditions in section 139CE have been satisfied in relation to the shares acquired by the employees the discount so calculated is subject to reduction pursuant to section 139BA. Only the amount of discount greater than $1,000 will be included in assessable income. | Where the employee does not make an election: 13. Where a participating employee acquires shares under the Plan and does not make an election under section 139E, the amount of discount on the shares will be included in assessable income pursuant to subsection 139B(3) in the year of income in which subsection 139CA(2) determines the cessation time occurs. 14. Where the participating employee disposes of the shares in an arm's length transaction within 30 days of the cessation time, the discount assessable at the cessation time under subsection 139B(3) will be calculated in accordance with subsection 139CC(3). It will be the consideration received on the disposal. 15. A capital gain or capital loss made as a consequence of such a disposal will be disregarded pursuant to subsection 130-83(2). 16. Shares that are not disposed of by the employee in an arm's length transaction within 30 days of the cessation time, will have the discount calculated in accordance with subsection 139CC(4). The discount will be the market value of the share at the cessation time worked out under section 139FA. 17. The first element of the cost base of the shares upon a capital gains tax event occurring will be their market value at the cessation time pursuant to subsection 130-83(3). 18. Employees will acquire shares under an 'employee share scheme' for the purposes of Division 13A upon issue of shares to ANZEST under the exemption scheme. 19. An employee acquires a beneficial interest in the shares allocated to them but held in trust on their behalf under paragraph 139(G)(e). 20. The shares acquired under the exemption scheme will be 'qualifying shares' for the purposes of section 139CD(1). | Where the employee makes an election: 21. An employee can elect under section 139E that subsection 139B(2) applies for a year of income. The election will apply to each qualifying share acquired by the employee in the year of income. Subsection 139B(2) provides that the discount is included in the taxpayer's assessable income in the year of acquisition of the share, that is, in the year when ANZEST is allocated the share for the benefit of the employee. 22. The discount is calculated in accordance with subsection 139CC(2). As the employee does not provide any consideration for the acquisition of the share the discount is the market value of the share, determined by section 139FA, when it was acquired by the employee. The market value of an ordinary share under section 139FA is: 23. Section 139CE contains three exemption conditions: The scheme as outlined satisfies the exemption conditions in section 139CE. Therefore subsection 139BA(2) will apply so that only the discount greater than $1,000 will be included in the employee's assessable income. 24. The first element of the cost base of the shares for the purposes of the capital gains tax provisions will be determined in accordance with subsection 130-80(2). No advice is provided on the operation of this provision as it is currently subject to a retrospective legislative amendment contained in Taxation Laws Amendment Bill (No. 8) of 2002. | Where the employee does not make an election: 25. Where a participating employee has not made an election under section 139E, as the shares are qualifying shares, the discount in relation to the shares will be included in assessable income pursuant to subsection 139B(3), in the year in which cessation time occurs. As the shares acquired under the plan will have restrictions on their disposal, ie. an employee will be prohibited from disposing of the shares for the first 3 years after acquisition, subsection 139CA(2) will determine when cessation time occurs. 26. Under the plan, cessation time will be the earliest of: cease to have effect. As set out in the Plan Rules this will be the earlier of three years after an employee acquires a beneficial interest in the share; and 27. Subsection 139CC(3) calculates the discount to be included in assessable income where the shares are disposed of by the employee in an arm's length transaction within 30 days of the cessation time. As no consideration has been given by the employee for the shares, the entire proceeds received by the employee on disposal will represent the discount to be included in assessable income. 28. As the share is a qualifying share and no election was made under section 139E for the year of income that the share was acquired, a capital gain or loss made on the disposal will be disregarded in accordance with subsection 130-83(2). 29. Shares that are not disposed of by the employee in an arm's length transaction within 30 days of cessation time will have the discount to be included in assessable income calculated in accordance with subsection 139CC(4). As no consideration has been given by the employee for the shares, the discount is the market value of the shares at cessation time. 30. As the shares in the Bank are listed on an approved stock exchange the market value of the shares for the purposes of paragraph 139CC(4)(a) will be determined in accordance with section 139FA, see paragraph 22. 31. The cost base of the shares for the purposes of the capital gains tax provisions will be determined in accordance with subsection 130-83(3), the first element being the market value of the shares worked out under section 139FA at cessation time. 32. Below is a detailed contents list for this Class Ruling: Commissioner of Taxation 12 March 2003 Not previously issued in draft form.




What this Class Ruling is about | Preamble: The number, subject heading, and the What this Class Ruling is about (including Tax law(s), Class of persons and Qualifications sections), Date of effect, Arrangement and Ruling parts of this document are a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953. CR 2001/1 explains Class Rulings and Taxation Rulings TR 92/1 and TR 97/16 together explain when a Ruling is a public ruling and how it is binding on the Commissioner. | What this Class Ruling is about: 1. This Ruling sets out the Commissioner's opinion on the way in which the 'tax law(s)' identified below apply to the defined class of persons, who take part in the arrangement to which this Ruling relates. | Tax law(s): 2. The tax laws dealt with in this Ruling are: | Where the employee make an election


Related rulings: TR 92/1 TR 92/20 TR 97/6 CR 2001/1
Legislative references: ITAA 1936 139B ITAA 1936 139B(2) ITAA 1936 139B(3) ITAA 1936 139BA ITAA 1936 139BA(2) ITAA 1936 139CA ITAA 1936 139CA(2) ITAA 1936 139CC ITAA 1936 139CC(2) ITAA 1936 139CC(3) ITAA 1936 139CC(4) ITAA 1936 139CC(4)(a) ITAA 1936 139CD ITAA 1936 139CD(1) ITAA 1936 139CE ITAA 1936 139CE(2) ITAA 1936 139CE(3) ITAA 1936 139CE(4) ITAA 1936 139E ITAA 1936 139E(1) ITAA 1936 139FA ITAA 1936 139FB ITAA 1936 139G ITAA 1936 139G(e) ITAA 1997 130-80 ITAA 1997 130-80(2) ITAA 1997 130-83 ITAA 1997 130-83(2) ITAA 1997 130-83(3) Taxation Laws Amendment Bill (No. 8) of 2002 TAA 1953 Part IVAAA Copyright Act 1968
Subject references: Employee Share Schemes