Class Ruling CR 2021/74

What this ruling is about: 1. This Ruling sets out the income tax consequences for employees of Endeavour Group Limited (Endeavour) who had rights to shares in Woolworths Group Limited (Woolworths) cancelled and received replacement rights to shares in Endeavour as a result of the demerger. 2. Full details of this scheme are set out in paragraphs 13 to 30 of this Ruling. 3. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. Who this Ruling applies to 4. This Ruling applies to you if: When this Ruling applies 5. This Ruling applies from 1 July 2020 to 30 June 2024. ESS interest 6. Your right to a Woolworths share under the WISP (WISP Right) which was cancelled was an ESS interest as defined in subsection 83A-10(1) just before it was cancelled. 7. The Replacement Right is an ESS interest as defined in subsection 83A-10(1). The demerger is a restructure 8. The demerger of Endeavour by Woolworths constitutes a restructure for the purposes of subsection 83A-130(1). New ESS interest treated as a continuation of old interest 9. The Replacement Right is treated as a continuation of the Cancelled Right for the purposes of subsection 83A-130(2). Continuation of employment 10. Your employment with Endeavour or a subsidiary of Endeavour after the demerger will be treated as a continuation of your employment in respect of which you acquired the WISP Right for the purposes of Division 83A (subsection 83A-130(6)). No ESS deferred taxing point 11. No ESS deferred taxing point will arise under section 83A-120 when your WISP Right was cancelled and replaced with a Replacement Right. Disregard capital gain or capital loss 12. You disregard any capital gain or capital loss made on the cancellation of the WISP Right under subsection 130-80(1). 13. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. Woolworths Incentive Share Plan 14. Woolworths has a number of employee share schemes in place, including its long-term incentive plan for executives, known as the WISP. 15. Under the WISP, rights were granted to employees, which are rights to acquire Woolworths shares. 16. The number of WISP Rights granted was determined by dividing the maximum award value by the volume-weighted average price (VWAP) of Woolworths shares traded on the Australian Securities Exchange during the five trading days up to and including the first date of the performance period. 17. The WISP Rights carried rights with respect to dividends paid on the underlying Woolworths shares over the performance period. Dividends paid during the vesting period by Woolworths increase the number of shares carried by the WISP Rights and will vest in the same proportion as the WISP Rights vest. 18. The vesting of the WISP Rights was subject to service and performance conditions. The performance conditions relate to three equally-weighted performance measures, being relative total shareholder return, sales per trading square metre and return on funds employed. 19. Prior to the demerger, Woolworths determined that the portion of the unvested WISP Rights that related to tenure after the demerger would not be cash settled and therefore could only be settled in shares on vesting. The demerger of Endeavour Group Limited 20. Immediately before the demerger, Woolworths held approximately 85.4% of the ordinary shares in Endeavour. 21. On 1 July 2021, the demerger of Endeavour was implemented by Woolworths transferring approximately 70.8% of the issued shares in Endeavour to ordinary shareholders in Woolworths. Replacement of Woolworths Incentive Share Plan rights 22. Employees of Endeavour who participated in the WISP had some of their WISP Rights impacted by the demerger. 23. The portion of an employee's WISP Rights representing the period of the service condition served prior to the demerger remains for future vesting under the WISP. 24. The other portion of an employee's WISP Rights were cancelled when Woolworths deemed them to be forfeited in accordance with the WISP rules. These rights, being the Cancelled Rights, were replaced by Replacement Rights granted on 28 October 2021. 25. The Replacement Rights are rights to acquire ordinary Endeavour shares. 26. The Replacement Rights are issued under Endeavour's employee share scheme known as the Endeavour Incentive Share Plan. 27. The total face value of Replacement Rights granted to an employee is equal to the number of their Cancelled Rights multiplied by the VWAP of Woolworths shares during the five trading days up to and including 23 June 2021. 28. The vesting of the Replacement Rights are subject to service and performance conditions. The performance conditions relate to three performance measures, being relative total shareholder return, return on funds employed and leading in responsibility. 29. The Replacement Rights may only be settled in shares on vesting. 30. The Replacement Rights carry rights with respect to dividends paid on the underlying Endeavour shares over the performance period. Commissioner of Taxation 17 November 2021 ESS interest 31. An ESS interest in a company is a beneficial interest in a share in the company or beneficial interest in a right to acquire a beneficial interest in a share in the company (subsection 83A-10(1)). 32. The WISP Right issued by Woolworths under the WISP, which was cancelled before the demerger, was an ESS interest just before it was cancelled, being a beneficial interest in a right to acquire a Woolworths share. 33. The Replacement Right issued by Endeavour is an ESS interest, being a beneficial interest in a right to acquire an Endeavour share. New ESS interest treated as a continuation of old interest 34. An amount is included in your assessable income for the income year in which an ESS deferred taxing point occurs in respect of your ESS interest (section 83A-110). 35. An ESS deferred taxing point may occur at the time you dispose of an ESS interest (paragraph 83A-120(3)(a)). 36. However, while a disposal of an ESS interest occurs under a restructure, it will not be treated as a disposal but a continuation of that interest if it can be reasonably regarded as having been replaced by another ESS interest in the new company (section 83A-130). 37. The demerger satisfies the requirements of section 83A-130 in relation to the WISP Right which were cancelled because: 38. Accordingly, for the purposes of Division 83A, the Replacement Right you acquired in connection with the restructure is treated as a continuation of the WISP Right you previously held. 39. In addition, your employment with Endeavour, or a subsidiary of Endeavour, will be regarded as a continuation of your employment with Woolworths or one of its subsidiaries in accordance with subsection 83A-130(6). That is, you have not ceased your employment within the meaning of section 83A-330 in respect of which you acquired the WISP Right which was cancelled. 40. Therefore, no ESS deferred taxing point will arise under section 83A-120 when your WISP Right was cancelled and replaced with a Replacement Right. Disregard capital gain or capital loss 41. You disregard any capital gain or capital loss on the WISP Right being cancelled because: 42. Accordingly, any capital gain or capital loss made from the WISP Right being cancelled is disregarded under section 130-80. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft

Class of entities or scheme: This publication (excluding appendix) is a public ruling for the purposes of the Taxation Administration Act 1953. If this Ruling applies to you, and you correctly rely on it, we will apply the law to you in the way set out in this Ruling. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. | What this Ruling is about: 1. This Ruling sets out the income tax consequences for employees of Endeavour Group Limited (Endeavour) who had rights to shares in Woolworths Group Limited (Woolworths) cancelled and received replacement rights to shares in Endeavour as a result of the demerger. 2. Full details of this scheme are set out in paragraphs 13 to 30 of this Ruling. 3. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. | Who this Ruling applies to: 4. This Ruling applies to you if: | When this Ruling applies: 5. This Ruling applies from 1 July 2020 to 30 June 2024.

Ruling: 1. This Ruling sets out the income tax consequences for employees of Endeavour Group Limited (Endeavour) who had rights to shares in Woolworths Group Limited (Woolworths) cancelled and received replacement rights to shares in Endeavour as a result of the demerger. 2. Full details of this scheme are set out in paragraphs 13 to 30 of this Ruling. 3. All legislative references in this Ruling are to the Income Tax Assessment Act 1997, unless otherwise indicated. | Who this Ruling applies to: 4. This Ruling applies to you if: | When this Ruling applies: 5. This Ruling applies from 1 July 2020 to 30 June 2024. | ESS interest: 6. Your right to a Woolworths share under the WISP (WISP Right) which was cancelled was an ESS interest as defined in subsection 83A-10(1) just before it was cancelled. 7. The Replacement Right is an ESS interest as defined in subsection 83A-10(1). | The demerger is a restructure: 8. The demerger of Endeavour by Woolworths constitutes a restructure for the purposes of subsection 83A-130(1). | New ESS interest treated as a continuation of old interest: 9. The Replacement Right is treated as a continuation of the Cancelled Right for the purposes of subsection 83A-130(2). | Continuation of employment: 10. Your employment with Endeavour or a subsidiary of Endeavour after the demerger will be treated as a continuation of your employment in respect of which you acquired the WISP Right for the purposes of Division 83A (subsection 83A-130(6)). | No ESS deferred taxing point: 11. No ESS deferred taxing point will arise under section 83A-120 when your WISP Right was cancelled and replaced with a Replacement Right. | Disregard capital gain or capital loss: 12. You disregard any capital gain or capital loss made on the cancellation of the WISP Right under subsection 130-80(1). 13. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. | Woolworths Incentive Share Plan: 14. Woolworths has a number of employee share schemes in place, including its long-term incentive plan for executives, known as the WISP. 15. Under the WISP, rights were granted to employees, which are rights to acquire Woolworths shares. 16. The number of WISP Rights granted was determined by dividing the maximum award value by the volume-weighted average price (VWAP) of Woolworths shares traded on the Australian Securities Exchange during the five trading days up to and including the first date of the performance period. 17. The WISP Rights carried rights with respect to dividends paid on the underlying Woolworths shares over the performance period. Dividends paid during the vesting period by Woolworths increase the number of shares carried by the WISP Rights and will vest in the same proportion as the WISP Rights vest. 18. The vesting of the WISP Rights was subject to service and performance conditions. The performance conditions relate to three equally-weighted performance measures, being relative total shareholder return, sales per trading square metre and return on funds employed. 19. Prior to the demerger, Woolworths determined that the portion of the unvested WISP Rights that related to tenure after the demerger would not be cash settled and therefore could only be settled in shares on vesting. | The demerger of Endeavour Group Limited: 20. Immediately before the demerger, Woolworths held approximately 85.4% of the ordinary shares in Endeavour. 21. On 1 July 2021, the demerger of Endeavour was implemented by Woolworths transferring approximately 70.8% of the issued shares in Endeavour to ordinary shareholders in Woolworths. | Replacement of Woolworths Incentive Share Plan rights: 22. Employees of Endeavour who participated in the WISP had some of their WISP Rights impacted by the demerger. 23. The portion of an employee's WISP Rights representing the period of the service condition served prior to the demerger remains for future vesting under the WISP. 24. The other portion of an employee's WISP Rights were cancelled when Woolworths deemed them to be forfeited in accordance with the WISP rules. These rights, being the Cancelled Rights, were replaced by Replacement Rights granted on 28 October 2021. 25. The Replacement Rights are rights to acquire ordinary Endeavour shares. 26. The Replacement Rights are issued under Endeavour's employee share scheme known as the Endeavour Incentive Share Plan. 27. The total face value of Replacement Rights granted to an employee is equal to the number of their Cancelled Rights multiplied by the VWAP of Woolworths shares during the five trading days up to and including 23 June 2021. 28. The vesting of the Replacement Rights are subject to service and performance conditions. The performance conditions relate to three performance measures, being relative total shareholder return, return on funds employed and leading in responsibility. 29. The Replacement Rights may only be settled in shares on vesting. 30. The Replacement Rights carry rights with respect to dividends paid on the underlying Endeavour shares over the performance period. Commissioner of Taxation 17 November 2021 | ESS interest: 31. An ESS interest in a company is a beneficial interest in a share in the company or beneficial interest in a right to acquire a beneficial interest in a share in the company (subsection 83A-10(1)). 32. The WISP Right issued by Woolworths under the WISP, which was cancelled before the demerger, was an ESS interest just before it was cancelled, being a beneficial interest in a right to acquire a Woolworths share. 33. The Replacement Right issued by Endeavour is an ESS interest, being a beneficial interest in a right to acquire an Endeavour share. | New ESS interest treated as a continuation of old interest: 34. An amount is included in your assessable income for the income year in which an ESS deferred taxing point occurs in respect of your ESS interest (section 83A-110). 35. An ESS deferred taxing point may occur at the time you dispose of an ESS interest (paragraph 83A-120(3)(a)). 36. However, while a disposal of an ESS interest occurs under a restructure, it will not be treated as a disposal but a continuation of that interest if it can be reasonably regarded as having been replaced by another ESS interest in the new company (section 83A-130). 37. The demerger satisfies the requirements of section 83A-130 in relation to the WISP Right which were cancelled because: 38. Accordingly, for the purposes of Division 83A, the Replacement Right you acquired in connection with the restructure is treated as a continuation of the WISP Right you previously held. 39. In addition, your employment with Endeavour, or a subsidiary of Endeavour, will be regarded as a continuation of your employment with Woolworths or one of its subsidiaries in accordance with subsection 83A-130(6). That is, you have not ceased your employment within the meaning of section 83A-330 in respect of which you acquired the WISP Right which was cancelled. 40. Therefore, no ESS deferred taxing point will arise under section 83A-120 when your WISP Right was cancelled and replaced with a Replacement Right. | Disregard capital gain or capital loss: 41. You disregard any capital gain or capital loss on the WISP Right being cancelled because: 42. Accordingly, any capital gain or capital loss made from the WISP Right being cancelled is disregarded under section 130-80. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft


Appendix: ESS interest: 31. An ESS interest in a company is a beneficial interest in a share in the company or beneficial interest in a right to acquire a beneficial interest in a share in the company (subsection 83A-10(1)). 32. The WISP Right issued by Woolworths under the WISP, which was cancelled before the demerger, was an ESS interest just before it was cancelled, being a beneficial interest in a right to acquire a Woolworths share. 33. The Replacement Right issued by Endeavour is an ESS interest, being a beneficial interest in a right to acquire an Endeavour share. | New ESS interest treated as a continuation of old interest: 34. An amount is included in your assessable income for the income year in which an ESS deferred taxing point occurs in respect of your ESS interest (section 83A-110). 35. An ESS deferred taxing point may occur at the time you dispose of an ESS interest (paragraph 83A-120(3)(a)). 36. However, while a disposal of an ESS interest occurs under a restructure, it will not be treated as a disposal but a continuation of that interest if it can be reasonably regarded as having been replaced by another ESS interest in the new company (section 83A-130). 37. The demerger satisfies the requirements of section 83A-130 in relation to the WISP Right which were cancelled because: 38. Accordingly, for the purposes of Division 83A, the Replacement Right you acquired in connection with the restructure is treated as a continuation of the WISP Right you previously held. 39. In addition, your employment with Endeavour, or a subsidiary of Endeavour, will be regarded as a continuation of your employment with Woolworths or one of its subsidiaries in accordance with subsection 83A-130(6). That is, you have not ceased your employment within the meaning of section 83A-330 in respect of which you acquired the WISP Right which was cancelled. 40. Therefore, no ESS deferred taxing point will arise under section 83A-120 when your WISP Right was cancelled and replaced with a Replacement Right. | Disregard capital gain or capital loss: 41. You disregard any capital gain or capital loss on the WISP Right being cancelled because: 42. Accordingly, any capital gain or capital loss made from the WISP Right being cancelled is disregarded under section 130-80. © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft




Legislative references: ITAA 1936 6(1) ITAA 1997 Div 83A ITAA 1997 83A-10(1) ITAA 1997 Subdiv 83A-C ITAA 1997 83A-110 ITAA 1997 83A-120 ITAA 1997 83A-120(3)(a) ITAA 1997 83A-130 ITAA 1997 83A-130(1) ITAA 1997 83A-130(1)(a)(ii) ITAA 1997 83A-130(1)(b) ITAA 1997 83A-130(2) ITAA 1997 83A-130(2)(a) ITAA 1997 83A-130(2)(b) ITAA 1997 83A-130(4) ITAA 1997 83A-130(6) ITAA 1997 83A-130(9)(a) ITAA 1997 83A-130(9)(b) ITAA 1997 83A-330 ITAA 1997 130-80 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 TAA 1953