Class Ruling CR 2011/40
Date of effect: 1 July 2010

What this ruling is about: 1. This Ruling sets out the Commissioner's opinion on the way in which the relevant provision(s) identified below apply to the defined class of entities who take part in the scheme to which this Ruling relates. Relevant provision(s) 2. The relevant provisions dealt with in this Class Ruling are: All subsequent legislative references in this Ruling are to the ITAA 1997 unless stated otherwise. Class of entities 3. The class of entities to which this Ruling applies is all persons who acquired AXA Asia Pacific Holdings (AXA APH) Limited shares (AXA APH shares) under the AXA APH General Tax Exempt Plan (the Plan) on or before 30 June 2009, while they were employees of AXA APH or one of its wholly owned subsidiaries (AXA APH group). They are persons who, during the period, hold the relevant shares (Plan Shares) in AXA APH, that is, from the time of acquisition until the time of the proposed AMP Limited (AMP) Acquisition (AMP Acquisition) (described in paragraphs 20 to 29 of this Ruling) and: In this Ruling, a person belonging to this class of entities is referred to as a 'participating employee'. Qualifications 4. The Commissioner makes this ruling based on the precise scheme identified in this Ruling. 5. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 9 to 29 of this Ruling. 6. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 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:

Class of entities or scheme: 3. The class of entities to which this Ruling applies is all persons who acquired AXA Asia Pacific Holdings (AXA APH) Limited shares (AXA APH shares) under the AXA APH General Tax Exempt Plan (the Plan) on or before 30 June 2009, while they were employees of AXA APH or one of its wholly owned subsidiaries (AXA APH group). They are persons who, during the period, hold the relevant shares (Plan Shares) in AXA APH, that is, from the time of acquisition until the time of the proposed AMP Limited (AMP) Acquisition (AMP Acquisition) (described in paragraphs 20 to 29 of this Ruling) and: In this Ruling, a person belonging to this class of entities is referred to as a 'participating employee'. | Qualifications: 4. The Commissioner makes this ruling based on the precise scheme identified in this Ruling. 5. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 9 to 29 of this Ruling. 6. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 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 1 July 2010. The Ruling continues to apply to all entities within the specified class who entered into the specified scheme during the term of the Ruling. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). 9. The scheme that is the subject of this ruling is described below. The following documents, or relevant parts of them form part of and are to be read with the description: Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. | AXA APH Exempt Plan: 10. The AXA APH group operates a number of employee share schemes including the Plan. 11. Under the Plan, AXA APH provided funds to NMH GESP Exempt (Australia) Pty Limited (Plan Company) to purchase fully paid ordinary shares in AXA APH on the Australian Securities Exchange. 12. The funds used by AXA APH to purchase shares were contributed by AXA APH group companies from contributions made by employees under effective salary sacrifice arrangements. 13. Shares purchased by the Plan Company under the Plan are registered in the name of participating employees. (There is no trust arrangement involved in the administration and operation of the Plan.) 14. Plan Shares acquired by participating employees under the Plan were provided at no cost to the participating employees due to the salary sacrifice arrangements. 15. Each Plan Share registered in the name of a participating employee is legally held by the participating employee subject to the terms of the Plan Rules, including certain restrictions on dealing. The Plan Rules provide that the participating employees may not transfer the Plan Share unless: 16. The Plan Rules do not provide for the forfeiture of the Plan Shares. 17. AXA APH has advised that all offers to acquire shares under the Plan were made on a non-discriminatory basis within the meaning of former subsection 139CE(4) of Division 13A of the ITAA 1936. 18. AXA APH has advised that: 19. AXA APH has advised that there are approximately 538 participating employees who have acquired AXA APH shares since 7 May 2008 following two separate offers made under the Plan. | Proposed AMP Acquisition of the AXA APH group: 20. AXA SA, AXA APH and AMP Limited (AMP) have entered into an arrangement under which: 21. AXA APH will become a wholly owned subsidiary of AMP after the Share Sale Transaction and the Share Scheme are approved and implemented. AXA APH and its Australian wholly owned subsidiaries will then form part of the AMP consolidated group for income tax purposes. 22. All participating employees of the AXA APH group will continue their employment with AXA APH or the relevant subsidiary following the AMP Acquisition. 23. AXA APH has advised that the proposed AMP Acquisition operates independently of the operation of the Plan. | Plan Shares held under the Share Scheme after the proposed AMP Acquisition: 24. After the proposed Share Scheme is approved, existing Plan Shares held by the participating employees will be acquired by AMP (or a wholly-owned subsidiary of AMP) by operation of the Share Scheme. The participating employees will receive for each of their AXA APH ordinary shares: 25. The Share Component and the Cash Component together form the consideration provided for each AXA APH ordinary share (AMP Consideration). 26. The Cash Component is subject to adjustments to reflect movements in the AMP daily volume weighted average share price for a period of 10 trading days immediately following the effective date of the Share Scheme (AMP VWAP). This mechanism is designed to: 27. If the AMP share price falls below $4.50 prior to the shareholders' meeting under the Share Scheme, AXA APH is entitled to terminate the proposed AMP Acquisition. 28. The terms of the Share Scheme seek to ensure that all AXA APH Minority Shareholders (including participating employees) will receive the AMP Consideration equivalent to their economic interest in AXA APH prior to the proposed AMP Acquisition. 29. AMP shares received by the participating employees are not subject to restrictions on disposal or forfeiture. | Election made: 30. Where a participating employee made an election under former section 139E of the ITAA 1936 covering Plan Shares acquired under the Plan during an income year, former Division 13A of the ITAA 1936 will continue to apply to those Plan Shares held by the participating employee. 31. Where the proposed AMP Acquisition is implemented and a participating employee receives a combination of cash and AMP shares (replacement AMP shares) for their Plan Shares, the discount previously excluded from the participating employee's assessable income in relation to Plan Shares acquired under the Plan during that year will continue to be excluded from their assessable income, pursuant to former subsection 139BA(2) of the ITAA 1936. 32. Where the proposed AMP Acquisition is implemented and a participating employee subsequently disposes of their replacement AMP shares before the earlier of: the discount previously excluded from their assessable income in relation to Plan Shares acquired under the Plan will continue to be excluded from their assessable income, pursuant to former subsection 139BA(2) of the ITAA 1936. | No election made: 33. Where a participating employee did not make an election under former section 139E of the ITAA 1936 covering Plan Shares acquired in a year of income, Subdivision 83A-C (and the rest of Division 83A to the extent that it relates to that Subdivision) will apply to those Plan Shares. 34. Where the proposed AMP Acquisition occurs: 35. The ESS deferred taxing point for the Plan Shares held by participating employees will, subject to paragraph 83A-5(4)(c) of the IT(TP)A 1997, be the cessation time mentioned in former subsection 139B(3) of the ITAA 1936. 36. The cessation time for these purposes will be the time determined by reference to any of the provisions in former Division 13A of the ITAA 1936 that may be necessary to determine the cessation time. 37. To the extent that participating employees receive cash consideration for their Plan Shares under the proposed AMP Acquisition, the cessation time will occur at the time of the AMP Acquisition in relation to those Plan Shares. This will be the deferred taxing point in respect of those shares. 38. To the extent that participating employees receive replacement AMP shares, the cessation time would be the earliest of: 39. Therefore, to the extent that participating employees receive replacement AMP shares, the ESS deferred taxing point for those shares is the cessation time as detailed in paragraph 38 of this Ruling. However, the deferred taxing point will, pursuant to paragraph 83A-5(4)(c) of the IT(TP)A 1997, be the time that the participating employee disposes of the replacement AMP shares where the disposal occurs within 30 days after the cessation time. | CGT event A1: 40. CGT event A1 happens when each Plan Share is disposed of by a participating employee to AMP (subsection 104-10(1)). | Subsection 130-80(1) on disposal of Plan Share: 41. Any capital gain or capital loss on the disposal to AMP of each Plan Share to which Subdivision 83A-C applies is disregarded (subsection 130-80(1)). | Cost base of AMP share: 42. If an AMP share is received by a participating employee on the disposal of a Plan Share to which Subdivision 83A-C applies and the participating employee continues to hold the AMP share after its ESS deferred taxing point, the first element of the cost base and reduced cost base of the AMP share is its market value immediately after its ESS deferred taxing point (section 83A-125, section 112-15 and either subsection 110-25(2) or 110-55(2)). | Disposal of AMP share at the ESS deferred taxing point: 43. If the ESS deferred taxing point happens at the time of the disposal of the AMP share, any capital gain or capital loss is disregarded (subsection 130-80(1)). | CGT Discount: 44. Where Subdivision 83A-C applies to the Plan Share the participating employee is taken to have acquired the AMP share, for the purposes of the CGT discount in Division 115, on the date on which the participating employee acquired legal title to the Plan Share, (subparagraph 83A-5(4)(f)(i) of the IT(TP)A 1997). Commissioner of Taxation 13 April 2011 45. The Commissioner accepts that Plan Shares, which were acquired by participating employees prior to 1 July 2009, are qualifying shares within the meaning of former section 139CD of the ITAA 1936. | Where election made: 46. Where a participating employee has Plan Shares that are covered by an election under former section 139E of the ITAA 1936, Division 83A does not apply to the shares in accordance with section 83A-5 of the IT(TP)A 1997. 47. Where Division 83A does not apply to a share and at the pre-Division 83A time, former Division 13A of the ITAA 1936 applied to the share, then former Division 13A continues to apply to the share (section 83A-10 of the IT(TP)A 1997). 48. Where the proposed AMP Acquisition is implemented and as a consequence participating employees receive a combination of cash and replacement AMP shares for their Plan Shares, the discount previously excluded from their assessable income in relation to the Plan Shares acquired under the Plan will continue to be excluded from their assessable income in accordance with former section 139BA of the ITAA 1936, provided the exemption conditions in former section 139CE of the ITAA 1936 continue to be satisfied. | The exemption conditions: 49. The exemption conditions contained in former section 139CE of the ITAA 1936 that must be satisfied require that the employee share scheme: 50. Thus, for the first $1,000 of discount to continue to be excluded from an employee's assessable income, the employee share scheme needs to continue to be operated in a manner that satisfies the exemption conditions. Forfeiture 51. The Plan Rules do not specifically provide for the forfeiture of Plan Shares. Further, the compulsory acquisition of a participating employee's Plan Shares under the proposed Share Scheme for valuable consideration (a combination of cash and replacement AMP shares) is not considered to constitute forfeiture. Therefore, the Commissioner accepts that the Plan does not have any conditions that could result in a participating employee forfeiting ownership of shares acquired under it. Disposal restrictions 52. The Plan Rules do not permit participating employees to dispose of their Plan Shares before the earlier of: 53. Therefore, the Commissioner accepts that where Plan Shares are disposed of pursuant to the proposed Share Scheme, such a disposal will not be a breach of this condition as the compulsory acquisition of Plan Shares is considered to have no connection with the operation of the Plan. Non-discriminatory basis 54. As the applicant has previously advised that all offers to acquire shares under the Plan are made on a non-discriminatory basis within the meaning of former subsection 139CE(4) of the ITAA 1936, the Commissioner accepts that the third condition is satisfied. | Continuing exclusion of discount from assessable income: 55. As the employee share scheme continues to be operated in a manner that satisfies these exemption conditions, the discount previously excluded from a participating employee's assessable income in relation to Plan Shares acquired under the Plan will continue to be excluded from their assessable income, pursuant to former section 139BA of the ITAA 1936. | ESS interests and deferred taxing points: 56. Division 83A applies to shares, rights and stapled securities acquired under an employee share scheme on or after 1 July 2009. Division 83A also applies to certain shares, rights and stapled securities acquired before 1 July 2009 (transitional interests), pursuant to Subdivision 83A-A of the IT(TP)A 1997. 57. By reason of subsection 83A-5(2) of the IT(TP)A 1997, Subdivision 83A-C (and the rest of Division 83A to the extent that it relates to that Subdivision) applies in relation to Plan Shares held by participating employees under the Plan because: 58. Therefore, Subdivision 83A-C will apply to the Plan Shares held by participating employees immediately prior to the proposed AMP Acquisition. 59. The application of Subdivision 83A-C to transitional interests is however, modified by subsection 83A-5(4) of the IT(TP)A 1997. Subparagraph 83A-5(4)(b)(i) of the IT(TP)A 1997 provides that where former subsection 139B(3) of the ITAA 1936 applied to a transitional interest (at the pre-Division 83A time), when applying Subdivision 83A-C, the ESS deferred taxing point for the transitional interest is treated as being the cessation time mentioned in former subsection 139B(3) of the ITAA 1936. Paragraph 83A-5(4)(c) of the IT(TP)A 1997 further provides that the deferred taxing point is shifted to the time of disposal of a transitional interest where the disposal occurs within 30 days after the cessation time. 60. Thus, whether a deferred taxing point arises when a participating employee's Plan Shares are replaced with AMP shares will depend on whether a cessation time as mentioned in former subsection 139B(3) of the ITAA 1936 happens. 61. The cessation time in relation to a participating employee's Plan Shares is determined by former subsection 139CA(2) of the ITAA 1936 which provides that the cessation time will occur at the earlier of a number of times, including: However, where: the cessation time will not happen at the AMP Acquisition time. 62. Former subsection 139DQ(1) of the ITAA 1936 provides that where, as a result of a 100% takeover: the matching shares will be treated for the purposes of former Division 13A of the ITAA 1936 as if they were a continuation of the shares the employee held in the old company. | 100% takeover: 63. The Commissioner accepts that the proposed AMP Acquisition would constitute a 100% takeover for the purposes of former Division 13A of the ITAA 1936. | Matching shares: 64. The Commissioner accepts that the AMP shares will be matching shares, within the meaning of former section 139DQ of the ITAA 1936. | Former section 139DR conditions: 65. The conditions in former section 139DR of the ITAA 1936 that must be met are: 66. As the Commissioner accepts that: former subsection 139DQ(1) of the ITAA 1936 will apply to the replacement AMP shares. Thus, for the purposes of former Division 13A of the ITAA 1936, the AMP replacement shares will be treated as if they were a continuation of participating employees' Plan Shares. Each AMP share will also be treated as a continuation of the corresponding Plan Shares, pursuant to section 83A-130. | Continuing employment: 67. Former subsection 139DQ(3) of the ITAA 1936 relevantly provides that for the purposes of former Division 13A of the ITAA 1936, where a participating employee is employed by AMP or a subsidiary of AMP after the AMP Acquisition, that employment will be treated as a continuation of the employment in respect of which they acquired their Plan Shares. 68. Therefore, as participating employees will be employed by the AMP consolidated group after the proposed AMP Acquisition their employment will be regarded as a continuation of their employment with AXA APH and they will not have ceased employment for the purposes of former paragraph 139CA(2)(c) of the ITAA 1936 and accordingly will not have a cessation time happen to them as a result of the proposed AMP Acquisition. 69. Thus, where under the AMP Acquisition a participating employee's Plan Shares are replaced with AMP shares, the AMP Acquisition will not of itself give rise to an ESS deferred taxing point. | Deferred taxing point: 70. The AMP Acquisition will give rise to a deferred taxing point where it results in the cessation time occurring. The cessation time is determined in accordance with former section 139CA of the ITAA 1936. | Participating employees receive cash and replacement AMP shares for Plan Shares: 71. To the extent that a participating employee receives cash for their Plan Shares it would constitute a disposal of their Plan Shares for the purposes of former paragraph 139CA(2)(a) of the ITAA 1936. 72. As none of the other paragraphs in former subsection 139CA(2) of the ITAA 1936 would apply at an earlier time, the disposal time would constitute a cessation time. 73. By virtue of the operation of subparagraph 83A-5(4)(b)(i) of the IT(TP)A 1997 the deferred taxing point will be at the cessation time. 74. To the extent that a participating employee receives replacement AMP shares for their Plan Shares, the disposal of the participating employee's Plan Shares at the time of the AMP Acquisition would not constitute a cessation time under former subsection 139CA(2) of the ITAA 1936 as the replacement AMP shares are treated as continuing shares for the purposes of former Division 13A of the ITAA 1936. 75. As a consequence of former paragraph 139CA(2)(b) of the ITAA 1936 not applying, a cessation time will only arise under former subsection 139CA(2) of the ITAA 1936 at the earliest of the following times: 76. By virtue of the operation of subparagraph 83A-5(4)(b)(i) of the IT(TP)A 1997 the deferred taxing point will be at the cessation time. 77. However, where the replacement AMP share is disposed of within 30 days of the cessation time, paragraph 83A-5(4)(c) of the IT(TP)A 1997 operates to treat the deferred taxing point as the cessation time. | Capital Gains Tax - no election made: CGT event A1 78. CGT event A1 happens when each Plan Share is disposed of to AMP (subsection 104-10(1)). Subsection 130-80(1) on disposal of Plan Share 79. Subsection 130-80(1) applies to disregard any capital gain or capital loss from a CGT event if the conditions in that subsection are satisfied and subsection 130-80(2) does not apply. 80. Subdivision 83A-C applies to the Plan Shares (subsection 83A-5(2) of the IT(TP)A 1997) and, because: any capital gain or capital loss on the disposal of each Plan Share by participating employees to AMP is disregarded under subsection 130-80(1). Cost base of AMP share 81. Each AMP share is a continuation of the corresponding Plan Shares (section 83A-130) so that Subdivision 83A-C, including section 83A-125, applies to the AMP share as it would have applied to each Plan share. The modification of the cost base (section 110-25) and reduced cost base (section 110-55) is facilitated by section 112-15. Disposal of AMP share at the ESS deferred taxing point 82. Subsection 130-80(1) applies because paragraphs (a) and (b), and subparagraph (d)(ii), of that provision are satisfied. The disposal of the AMP share is subsequent to the disposal of the Plan Shares. Any capital gain or capital loss on the disposal of each Plan Share has already been disregarded (subsection 130-80(1)); the AMP share is taken to have been a continuation of the corresponding Plan Shares (section 83A-130); Subdivision 83A-C continues to apply to the AMP share; and Subdivision 130-D continues to be relevant if the AMP share is disposed of on or before the time of its ESS deferred taxing point. CGT Discount 83. Where Subdivision 83A-C applies to the Plan Share the participating employee is taken to have acquired the AMP share, for the purposes of the CGT discount in Division 115, on the date on which the participating employee acquired legal title to the Plan Share, (subparagraph 83A-5(4)(f)(i) of the IT(TP)A 1997). 84. The following is a detailed contents list for this Ruling: Not previously issued as a draft

Ruling: Election made: 30. Where a participating employee made an election under former section 139E of the ITAA 1936 covering Plan Shares acquired under the Plan during an income year, former Division 13A of the ITAA 1936 will continue to apply to those Plan Shares held by the participating employee. 31. Where the proposed AMP Acquisition is implemented and a participating employee receives a combination of cash and AMP shares (replacement AMP shares) for their Plan Shares, the discount previously excluded from the participating employee's assessable income in relation to Plan Shares acquired under the Plan during that year will continue to be excluded from their assessable income, pursuant to former subsection 139BA(2) of the ITAA 1936. 32. Where the proposed AMP Acquisition is implemented and a participating employee subsequently disposes of their replacement AMP shares before the earlier of: the discount previously excluded from their assessable income in relation to Plan Shares acquired under the Plan will continue to be excluded from their assessable income, pursuant to former subsection 139BA(2) of the ITAA 1936. | No election made: 33. Where a participating employee did not make an election under former section 139E of the ITAA 1936 covering Plan Shares acquired in a year of income, Subdivision 83A-C (and the rest of Division 83A to the extent that it relates to that Subdivision) will apply to those Plan Shares. 34. Where the proposed AMP Acquisition occurs: 35. The ESS deferred taxing point for the Plan Shares held by participating employees will, subject to paragraph 83A-5(4)(c) of the IT(TP)A 1997, be the cessation time mentioned in former subsection 139B(3) of the ITAA 1936. 36. The cessation time for these purposes will be the time determined by reference to any of the provisions in former Division 13A of the ITAA 1936 that may be necessary to determine the cessation time. 37. To the extent that participating employees receive cash consideration for their Plan Shares under the proposed AMP Acquisition, the cessation time will occur at the time of the AMP Acquisition in relation to those Plan Shares. This will be the deferred taxing point in respect of those shares. 38. To the extent that participating employees receive replacement AMP shares, the cessation time would be the earliest of: 39. Therefore, to the extent that participating employees receive replacement AMP shares, the ESS deferred taxing point for those shares is the cessation time as detailed in paragraph 38 of this Ruling. However, the deferred taxing point will, pursuant to paragraph 83A-5(4)(c) of the IT(TP)A 1997, be the time that the participating employee disposes of the replacement AMP shares where the disposal occurs within 30 days after the cessation time. | CGT event A1: 40. CGT event A1 happens when each Plan Share is disposed of by a participating employee to AMP (subsection 104-10(1)). | Subsection 130-80(1) on disposal of Plan Share: 41. Any capital gain or capital loss on the disposal to AMP of each Plan Share to which Subdivision 83A-C applies is disregarded (subsection 130-80(1)). | Cost base of AMP share: 42. If an AMP share is received by a participating employee on the disposal of a Plan Share to which Subdivision 83A-C applies and the participating employee continues to hold the AMP share after its ESS deferred taxing point, the first element of the cost base and reduced cost base of the AMP share is its market value immediately after its ESS deferred taxing point (section 83A-125, section 112-15 and either subsection 110-25(2) or 110-55(2)). | Disposal of AMP share at the ESS deferred taxing point: 43. If the ESS deferred taxing point happens at the time of the disposal of the AMP share, any capital gain or capital loss is disregarded (subsection 130-80(1)). | CGT Discount: 44. Where Subdivision 83A-C applies to the Plan Share the participating employee is taken to have acquired the AMP share, for the purposes of the CGT discount in Division 115, on the date on which the participating employee acquired legal title to the Plan Share, (subparagraph 83A-5(4)(f)(i) of the IT(TP)A 1997). Commissioner of Taxation 13 April 2011


Appendix: 45. The Commissioner accepts that Plan Shares, which were acquired by participating employees prior to 1 July 2009, are qualifying shares within the meaning of former section 139CD of the ITAA 1936. | Where election made: 46. Where a participating employee has Plan Shares that are covered by an election under former section 139E of the ITAA 1936, Division 83A does not apply to the shares in accordance with section 83A-5 of the IT(TP)A 1997. 47. Where Division 83A does not apply to a share and at the pre-Division 83A time, former Division 13A of the ITAA 1936 applied to the share, then former Division 13A continues to apply to the share (section 83A-10 of the IT(TP)A 1997). 48. Where the proposed AMP Acquisition is implemented and as a consequence participating employees receive a combination of cash and replacement AMP shares for their Plan Shares, the discount previously excluded from their assessable income in relation to the Plan Shares acquired under the Plan will continue to be excluded from their assessable income in accordance with former section 139BA of the ITAA 1936, provided the exemption conditions in former section 139CE of the ITAA 1936 continue to be satisfied. | The exemption conditions: 49. The exemption conditions contained in former section 139CE of the ITAA 1936 that must be satisfied require that the employee share scheme: 50. Thus, for the first $1,000 of discount to continue to be excluded from an employee's assessable income, the employee share scheme needs to continue to be operated in a manner that satisfies the exemption conditions. Forfeiture 51. The Plan Rules do not specifically provide for the forfeiture of Plan Shares. Further, the compulsory acquisition of a participating employee's Plan Shares under the proposed Share Scheme for valuable consideration (a combination of cash and replacement AMP shares) is not considered to constitute forfeiture. Therefore, the Commissioner accepts that the Plan does not have any conditions that could result in a participating employee forfeiting ownership of shares acquired under it. Disposal restrictions 52. The Plan Rules do not permit participating employees to dispose of their Plan Shares before the earlier of: 53. Therefore, the Commissioner accepts that where Plan Shares are disposed of pursuant to the proposed Share Scheme, such a disposal will not be a breach of this condition as the compulsory acquisition of Plan Shares is considered to have no connection with the operation of the Plan. Non-discriminatory basis 54. As the applicant has previously advised that all offers to acquire shares under the Plan are made on a non-discriminatory basis within the meaning of former subsection 139CE(4) of the ITAA 1936, the Commissioner accepts that the third condition is satisfied. | Continuing exclusion of discount from assessable income: 55. As the employee share scheme continues to be operated in a manner that satisfies these exemption conditions, the discount previously excluded from a participating employee's assessable income in relation to Plan Shares acquired under the Plan will continue to be excluded from their assessable income, pursuant to former section 139BA of the ITAA 1936. | ESS interests and deferred taxing points: 56. Division 83A applies to shares, rights and stapled securities acquired under an employee share scheme on or after 1 July 2009. Division 83A also applies to certain shares, rights and stapled securities acquired before 1 July 2009 (transitional interests), pursuant to Subdivision 83A-A of the IT(TP)A 1997. 57. By reason of subsection 83A-5(2) of the IT(TP)A 1997, Subdivision 83A-C (and the rest of Division 83A to the extent that it relates to that Subdivision) applies in relation to Plan Shares held by participating employees under the Plan because: 58. Therefore, Subdivision 83A-C will apply to the Plan Shares held by participating employees immediately prior to the proposed AMP Acquisition. 59. The application of Subdivision 83A-C to transitional interests is however, modified by subsection 83A-5(4) of the IT(TP)A 1997. Subparagraph 83A-5(4)(b)(i) of the IT(TP)A 1997 provides that where former subsection 139B(3) of the ITAA 1936 applied to a transitional interest (at the pre-Division 83A time), when applying Subdivision 83A-C, the ESS deferred taxing point for the transitional interest is treated as being the cessation time mentioned in former subsection 139B(3) of the ITAA 1936. Paragraph 83A-5(4)(c) of the IT(TP)A 1997 further provides that the deferred taxing point is shifted to the time of disposal of a transitional interest where the disposal occurs within 30 days after the cessation time. 60. Thus, whether a deferred taxing point arises when a participating employee's Plan Shares are replaced with AMP shares will depend on whether a cessation time as mentioned in former subsection 139B(3) of the ITAA 1936 happens. 61. The cessation time in relation to a participating employee's Plan Shares is determined by former subsection 139CA(2) of the ITAA 1936 which provides that the cessation time will occur at the earlier of a number of times, including: However, where: the cessation time will not happen at the AMP Acquisition time. 62. Former subsection 139DQ(1) of the ITAA 1936 provides that where, as a result of a 100% takeover: the matching shares will be treated for the purposes of former Division 13A of the ITAA 1936 as if they were a continuation of the shares the employee held in the old company. | 100% takeover: 63. The Commissioner accepts that the proposed AMP Acquisition would constitute a 100% takeover for the purposes of former Division 13A of the ITAA 1936. | Matching shares: 64. The Commissioner accepts that the AMP shares will be matching shares, within the meaning of former section 139DQ of the ITAA 1936. | Former section 139DR conditions: 65. The conditions in former section 139DR of the ITAA 1936 that must be met are: 66. As the Commissioner accepts that: former subsection 139DQ(1) of the ITAA 1936 will apply to the replacement AMP shares. Thus, for the purposes of former Division 13A of the ITAA 1936, the AMP replacement shares will be treated as if they were a continuation of participating employees' Plan Shares. Each AMP share will also be treated as a continuation of the corresponding Plan Shares, pursuant to section 83A-130. | Continuing employment: 67. Former subsection 139DQ(3) of the ITAA 1936 relevantly provides that for the purposes of former Division 13A of the ITAA 1936, where a participating employee is employed by AMP or a subsidiary of AMP after the AMP Acquisition, that employment will be treated as a continuation of the employment in respect of which they acquired their Plan Shares. 68. Therefore, as participating employees will be employed by the AMP consolidated group after the proposed AMP Acquisition their employment will be regarded as a continuation of their employment with AXA APH and they will not have ceased employment for the purposes of former paragraph 139CA(2)(c) of the ITAA 1936 and accordingly will not have a cessation time happen to them as a result of the proposed AMP Acquisition. 69. Thus, where under the AMP Acquisition a participating employee's Plan Shares are replaced with AMP shares, the AMP Acquisition will not of itself give rise to an ESS deferred taxing point. | Deferred taxing point: 70. The AMP Acquisition will give rise to a deferred taxing point where it results in the cessation time occurring. The cessation time is determined in accordance with former section 139CA of the ITAA 1936. | Participating employees receive cash and replacement AMP shares for Plan Shares: 71. To the extent that a participating employee receives cash for their Plan Shares it would constitute a disposal of their Plan Shares for the purposes of former paragraph 139CA(2)(a) of the ITAA 1936. 72. As none of the other paragraphs in former subsection 139CA(2) of the ITAA 1936 would apply at an earlier time, the disposal time would constitute a cessation time. 73. By virtue of the operation of subparagraph 83A-5(4)(b)(i) of the IT(TP)A 1997 the deferred taxing point will be at the cessation time. 74. To the extent that a participating employee receives replacement AMP shares for their Plan Shares, the disposal of the participating employee's Plan Shares at the time of the AMP Acquisition would not constitute a cessation time under former subsection 139CA(2) of the ITAA 1936 as the replacement AMP shares are treated as continuing shares for the purposes of former Division 13A of the ITAA 1936. 75. As a consequence of former paragraph 139CA(2)(b) of the ITAA 1936 not applying, a cessation time will only arise under former subsection 139CA(2) of the ITAA 1936 at the earliest of the following times: 76. By virtue of the operation of subparagraph 83A-5(4)(b)(i) of the IT(TP)A 1997 the deferred taxing point will be at the cessation time. 77. However, where the replacement AMP share is disposed of within 30 days of the cessation time, paragraph 83A-5(4)(c) of the IT(TP)A 1997 operates to treat the deferred taxing point as the cessation time. | Capital Gains Tax - no election made: CGT event A1 78. CGT event A1 happens when each Plan Share is disposed of to AMP (subsection 104-10(1)). Subsection 130-80(1) on disposal of Plan Share 79. Subsection 130-80(1) applies to disregard any capital gain or capital loss from a CGT event if the conditions in that subsection are satisfied and subsection 130-80(2) does not apply. 80. Subdivision 83A-C applies to the Plan Shares (subsection 83A-5(2) of the IT(TP)A 1997) and, because: any capital gain or capital loss on the disposal of each Plan Share by participating employees to AMP is disregarded under subsection 130-80(1). Cost base of AMP share 81. Each AMP share is a continuation of the corresponding Plan Shares (section 83A-130) so that Subdivision 83A-C, including section 83A-125, applies to the AMP share as it would have applied to each Plan share. The modification of the cost base (section 110-25) and reduced cost base (section 110-55) is facilitated by section 112-15. Disposal of AMP share at the ESS deferred taxing point 82. Subsection 130-80(1) applies because paragraphs (a) and (b), and subparagraph (d)(ii), of that provision are satisfied. The disposal of the AMP share is subsequent to the disposal of the Plan Shares. Any capital gain or capital loss on the disposal of each Plan Share has already been disregarded (subsection 130-80(1)); the AMP share is taken to have been a continuation of the corresponding Plan Shares (section 83A-130); Subdivision 83A-C continues to apply to the AMP share; and Subdivision 130-D continues to be relevant if the AMP share is disposed of on or before the time of its ESS deferred taxing point. CGT Discount 83. Where Subdivision 83A-C applies to the Plan Share the participating employee is taken to have acquired the AMP share, for the purposes of the CGT discount in Division 115, on the date on which the participating employee acquired legal title to the Plan Share, (subparagraph 83A-5(4)(f)(i) of the IT(TP)A 1997).


What this Ruling is about | NOT LEGALLY BINDING SECTION: | A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. | If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. | Appendix 2 - Detailed contents list


Related rulings: TR 2006/10
Legislative references: ITAA 1936 Pt III Div 13A ITAA 1936 139B(3) ITAA 1936 139BA ITAA 1936 139BA(2) ITAA 1936 139CA ITAA 1936 139CA(2) ITAA 1936 139CA(2)(a) ITAA 1936 139CA(2)(b) ITAA 1936 139CA(2)(c) ITAA 1936 139CA(3) ITAA 1936 139CD ITAA 1936 139CE ITAA 1936 139CE(4) ITAA 1936 139CE(5) ITAA 1936 Div 13A Subdiv DA ITAA 1936 139DQ ITAA 1936 139DQ(1) ITAA 1936 139DQ(3) ITAA 1936 139DR ITAA 1936 139E ITAA 1936 139GBA ITAA 1936 139GF ITAA 1997 Div 83A ITAA 1997 Subdiv 83A-C ITAA 1997 83A-125 ITAA 1997 83A-130 ITAA 1997 83-10(1) ITAA 1997 104-10(1) ITAA 1997 110-25(2) ITAA 1997 110-55 ITAA 1997 110-55(2) ITAA 1997 112-15 ITAA 1997 Div 115 ITAA 1997 Subdiv 130-D ITAA 1997 130-80(1) ITAA 1997 130-80(1)(a) ITAA 1997 130-80(1)(b) ITAA 1997 130-80(1)(d)(ii) ITAA 1997 130-80(2) ITAA 1997 Div 230 ITAA 1997 995-1 IT(TP)A 1997 Subdiv 83A-A IT(TP)A 1997 83A-5 IT(TP)A 1997 83A-5(2) IT(TP)A 1997 83A-5(4) IT(TP)A 1997 83A-5(4)(b)(i) IT(TP)A 1997 83A-5(4)(c) IT(TP)A 1997 83A-5(4)(f)(i) IT(TP)A 1997 83A-10 TAA 1953 TAA 1953 Sch 1 357-75(1) Corporations Act 2001 411 Copyright Act 1968
Subject references: capital gains tax cessation time CGT event cost base employee share scheme election no election qualifying share