Ruling Compendium TD 2010/10EC
Status: not legally binding







The edited version of the Compendium of Comments is a Tax Office communication that is not intended to be relied upon as it provides no protection from primary tax, penalties, interest or sanctions for non-compliance with the law. | In accordance with PS LA 2008/3 it only affords level 3 protection. | This is a compendium of responses to the issues raised by external parties to draft TD 2009/D5 - Income tax: can Part IVA of the Income Tax Assessment Act 1936 apply to an employee savings plan as described in Taxpayer Alert TA 2008/13? | This compendium of comments has been edited to maintain the anonymity of entities that commented on the draft ruling. | ATO Response/Action taken | Part IVA of the ITAA 1936 should not apply to a genuine loan arrangement so that where an employer makes a loan to an employee to allow an employee to acquire employer shares or units; this should not of itself attract Part IVA. That is, Part IVA should not apply to employee share scheme or trust arrangements. Further it would be unusual for these arrangements to be entered into for a dominant tax purpose as many are entered into for genuine commercial and incentive reasons. | The ATO view is that, under a salary sacrifice arrangement, the rights to salary or wages income are permanently sacrificed in return for the provision of benefits of an equivalent amount. It is assumed that the income 'sacrificed' is dealt with at that time under other taxing provisions. | Whether an arrangement is akin to the arrangement described in the Determination will depend on all the facts and circumstances of that arrangement.