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1 Will Company A, as head company of the income 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 it (or another entity within the tax consolidated group) to Company B (Trustee) as trustee of the Company A (the Trust) to fund the subscription for, or acquisition on-market of, Company A's ordinary shares (Shares) by the Trustee to satisfy the Rights and Options issued under the Plan (as defined in the relevant facts and circumstances, together Awards)?

1 Yes Question 2 Will Company A obtain an income tax deduction pursuant to section 8-1 of the ITAA 1997 in respect of the costs incurred in relation to the on-going administration of the Trust? Answer 2 Yes Question 3 Will the irretrievable cash contributions made by Company A (or another entity within the income tax consolidated group) to the Trustee, to fund the subscription for, or acquisition on-market of, Shares by the Trust, to satisfy ESS interests issued pursuant to the Plan, be deductible to Company A at the time determined by section 83A-210 of the ITAA 1997, if the contributions are made before the acquisition of the relevant ESS interests by Participants under the Plan? Answer 3 Yes Question 4 Will the Commissioner make a determination that Part IVA of the Income Tax Assessment Act 1936 (ITAA 1936) applies to deny, in part or in full, any deduction claimed by Company A in respect of the irretrievable cash contributions made by Company A to the Trustee to fund the subscription for, or acquisition on-market of, Company A's Shares by the Trustee, or costs incurred by Company A in relation to the on-going administration of the Trust? Answer 4 No Question 5

Is the provision of Shares, in satisfaction of Awards under the Plan, a 'fringe benefit' within the meaning of that term in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? Answer 5 No Question 6 Will the contribution of funds by Company A to the Trust in order to subscribe for, or acquire on-market, Company A's Shares; and/or fund the ongoing administration of the Trust be a fringe benefit within the meaning of that term in subsection 136(1) of the FBTAA? Answer 6 No This ruling applies for the following periods: For questions 1 to 4 •                     Income tax year ended 30 June 20XX •                     Income tax year ending 30 June 20XX •                     Income tax year ending 30 June 20XX •                     Income tax year ending 30 June 20XX •                     Income tax year ending 30 June 20XX For questions 5 to 6 •                     Fringe benefits tax year ended 31 March 20XX •                     Fringe benefits tax year ending 31 March 20XX •                     Fringe benefits tax year ending 31 March 20XX •                     Fringe benefits tax year ending 31 March 20XX

•                     Fringe benefits tax year ending 31 March 20XX

Company A is an Australian company listed on the Australian Securities Exchange that carries on a business in Australia. Company C is the employing entity and a member of Company A's income tax consolidated group. Company B (the Trustee) is the current trustee for the Company A Employee Share Plan Trust (the Trust). The Trust is an Employee Share Trust that was settled by Company A for the purposes of administering Company A's Executive Incentive Plan. Company A has introduced the Company A Executive Incentive Plan (Plan). Company A established the Trust on XX for the purpose of obtaining and administering Company A shares (Shares) for the benefit of employees participating in Company A's Plan. Purpose The purposes of the Plan are: •                     To attract and/or retain skilled employees. •                     To align employee interests with Company A's shareholders and the achievement of Company A's strategy. •                     To establish Employee Share Schemes within the meaning of Division 83A of the ITAA 1997. Awards made under the Plans are a key component of the remuneration packages offered to employees (including key management personnel). Operation

Under the Plan: •                     Offers of Rights or Options to acquire Shares in Company A (together the Awards) are made to employees (Participants). •                     Offers may be made annually or on a once-off basis. •                     Offers may be subject to vesting conditions. where vesting conditions are not met, the Awards will lapse. •                     Once vested, Awards are no longer forfeitable; where the vesting conditions are met, each Award may be exercised by the Participant. •                     Share Rights are provided at nil cost to the Participant. Options are provided at no cost with an exercise price that causes the market value of the option to be greater than nil. The Plan allows for Company A to provide participants with a loan to acquire shares for market value consideration. Any such arrangement will not be administered through the Trust. The Plan allows for Company A to provide a cash payment in lieu of Shares. Any such payment will not be administered through the Trust but will instead be processed via Company A's payroll. Participants

Participants in the Plan will be employees (including key management personnel) of Company A or its subsidiaries. The Participants, through management, governance and conduct of Company A's business operations, directly generate assessable Australian income for Company A. The Participants are Australian tax residents who work primarily in Australia for the benefit of Company A in Australia. Funding The Plan will be funded by irretrievable cash contributions made by Company A (or a subsidiary in Company A's tax consolidated group) to the Trust as and when required. Funds transferred into the Trust must only be used to subscribe for Shares or acquire Shares on-market in Company A and for the purposes of administering the Plan. It is proposed that contributions will be made to the Trust in the financial year ending 30 June 20XX and subsequent income tax years in accordance with the protocols set out below: •                     The amount of funds transferred will be determined based on an estimated forecast to determine if the Trust holds sufficient Shares to satisfy future potential vesting. This will include a review of: •                     the quantum of outstanding Awards, and

•                     likelihood of the Awards vesting. •                     Management will review these forecasts and provide recommendations to the Board periodically to ensure the Trust is properly funded. •                     Company A's Board will provide guidance to the Trustee on how the Trustee should acquire the Shares, whether by way of on-market purchase or subscription. •                     The Trustee will then consider the Board's recommendations and having regard to its broader obligations under the Trust Deed and trust law will acquire the shares on-market or by way of subscription. The trust Company A established the Trust on XX for the purpose of obtaining and administering Shares for the benefit of employees participating in Company A's Plan. It is also intended that the Trust will be available to facilitate the requirements of any future equity plans Company A introduces. The operation of the Trust is governed by the Company A Employee Share Plan Trust Deed (Trust Deed) as amended on XX. Company A's reasons for administering the Awards via the Trust include:

•                     The Trust enables the acquisition of Shares, either on-market or by subscribing, in accordance with Company A's preferred timeline. •                     Company A can manage its costs and share capital position by having the Trust acquire Shares before the employees meet the vesting criteria and become entitled to the Shares. If the employees do not meet the vesting criteria, the Trust can reallocate the Shares to fulfil future vesting. •                     The Trust allows Company A to have Shares available when Participants exercise their Awards. •                     The Trust provides the opportunity to improve cash flow planning as Company A can, if desired, make contributions to the Trust periodically throughout the vesting period. This provides Company A with flexibility to determine the most appropriate time to make contributions. •                     The Trust is the most appropriate vehicle to acquire Shares during the vesting period, thus assisting Company A to meet the costs of Awards. •                     The Trustee has a fiduciary duty to the Participants and has the obligation to act in the interests of its beneficiaries, i.e. Participants.

All contributions to the Trust will be made by Company A or a subsidiary in its tax consolidated group. The Trustee's actions to purchase Shares on-market, or subscribe for new Shares in Company A will take into consideration the Corporations Act 2001 requirements and at all times the Trustee will make decisions in accordance with the terms of the Trust Deed, the rules of the Plan, and in fulfilment of the Trustee's fiduciary duty to beneficiaries. The Deed has the following clauses of note: •                     XX states that all funds provided by Company A are not repayable. •                     XX states that the Trust must be operated in accordance with the Plan Rules. •                     XX states that Company A and the Trustee agree the Trust will be managed and administered so that it satisfies the definition of 'employee share trust' for the purpose of subsection 130-85(4).

Income Tax Assessment Act 1936 subsection 177D(2) Income Tax Assessment Act 1936 section 177F 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 subsection 83A-10(1) Income Tax Assessment Act 1997 subsection 83A-10(2) Income Tax Assessment Act 1997 section 83A-210 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 section 701-1 Fringe Benefits Tax Assessment Act 1986 section 66 Fringe Benefits Tax Assessment Act 1986 subsection 136(1) Fringe Benefits Tax Assessment Act 1986 paragr

Question 1 Company A will obtain a tax deduction under section 8-1 of the ITAA 1997 in respect of irretrievable cash contributions made by Company A (or another entity within the tax consolidated group) to the Trust to fund the subscription for, or acquisition on-market of, Company A's Shares by the Trustee to satisfy the Awards issued under the Plan. Detailed reasoning For present purposes, subsection 8-1(1) will allow 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 carries on a business in Australia which produces assessable income. Company A operates an employee share scheme (ESS) as part of its remuneration strategy.

Under the Plan, Company A grants Rights or Options to employees and makes irretrievable contributions to the Trust (in accordance with the Plan Rules and the Trust Deed) which the Trustee will use to acquire Shares (either on-market or by subscription) for allocation to Participants to satisfy their Awards. Incurred in carrying on a business Company A must provide the Trustee with all the funds required to act as requested. The contributions made by Company A are irretrievable and non-refundable in accordance with the Trust Deed as all funds provided are not repayable (subclause XX of the Trust Deed), and the Trust must be operated in accordance with the Plan Rules (subclause XX). As the funds are not repayable by the Trustee, the contributions will represent a permanent loss or outgoing incurred by Company A. Not capital or of a capital nature

The costs will be an outgoing incurred for periodic funding of a ESS for employees of Company A. Costs incurred are likely to be in relation to more than one grant of Awards (rather than being one-off). This indicates that the irretrievable cash contributions to the Trust are ongoing in nature and are part of the broader remuneration expenditure of Company A. While the 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 sufficiently small. Therefore, the payments are not capital, or of a capital nature. Accordingly, Company A will be entitled to deduct an amount under section 8-1 for irretrievable cash contributions it makes to the Trustee of the Trust to acquire Shares to satisfy ESS interests issued under the Plans. Question 2 Company A will obtain an income tax deduction in respect of costs incurred in relation to on-going administration of the Trust at section 8-1 ITAA 1997. Detailed reasoning

Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, incurred in producing exempt or non-assessable non-exempt income or where a provision of the tax law prevents the deduction. Company A produces assessable income via ordinary business activities and part of the operation of the business includes operating an ESS as part of its remuneration strategy. Company A incurs ongoing administrative costs for operating the ESS such as administration fees, tax/audit compliance fees and similar costs. These costs are regular and recurrent costs of employment which are deductible under section 8-1 as they are costs necessarily incurred in running the ESS while carrying on its business for the purpose of gaining or producing the assessable income. Relevantly, these costs are not capital or of a capital nature as the loss or outgoings are regular and recurrent and are part of the ordinary employee remuneration costs of the company (as confirmed in Taxation Determination TD 2022/8:

Income tax: deductibility of expenses incurred in establishing an employee share scheme ). Question 3 Irretrievable cash contributions made by Company A or another entity within Company A's income tax consolidated group to the Trustee will be deductible to Company A at the time determined by section 83A-210 of the ITAA 1997 if the contributions are made before the acquisition of relevant ESS interests by the Participants under the Plan. Detailed reasoning Section 83A-210 applies to determine the timing of the deduction, but only in respect of the contribution provided to the Trust to acquire ESS interests in excess of the number required to grant the relevant ESS interests to the employees arising in the year of income under an employee share scheme. Further information is available in 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 .

The Plan comprises an employee share scheme for the purposes of subsection 83A-10(2) as it is a scheme under which ESS interests (i.e. a beneficial interest in an option or a right to acquire a beneficial interest in a share) are provided to employees in relation to their employment with Company A. The employee share scheme contains a number of interrelated components which includes the provision of irretrievable cash contributions to the Trustee. These contributions enable the Trustee to acquire Shares for the purpose of enabling each Participant, indirectly as part of the Plan, to acquire ESS interests. The deduction under section 8-1 for the irretrievable cash contributions is allowable in the income year the relevant beneficial interest in an Option or Right to a beneficial interest in a Share, is acquired by a Participant under the Plan. Question 4

The Commissioner will not make a determination that Part IVA of the ITAA 1936 applies to deny, in part or full any deduction claimed by Company A in respect of the irretrievable cash contributions made by Company A to the Trustee to fund the subscription for, or acquisition on-market of, Shares by the Trustee, or costs incurred by Company A in relation to the on-going administration of the Plans of the Trust. 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, 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 entry into 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. Question 5 The provision of Shares in satisfaction of Awards under the Plan is not a 'fringe benefit' within the meaning of that term in subsection 136(1) of the FBTAA. 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 'fringe benefit' definition. In particular, 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 Commissioner accepts that the Plan is an employee share scheme, the Options and Rights for the Shares provided under the Plan are ESS interests and that Subdivision 83A-B or 83A-C applies to those ESS interests as they are provided at a discount. Accordingly, the provision of Options or Rights for Shares under the Plan will not be subject to FBT on the basis that they are acquired by Participants under an employee share scheme (to which Subdivision 83A-B or 83A-C will apply) and are thereby excluded from being a fringe benefit by virtue of paragraph (h) of the definition of fringe benefit in subsection 136(1) of the FBTAA. In addition, when an option 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 option and not in respect of employment (refer ATO Interpretative Decision ATO ID 2010/219

Fringe Benefits Tax Fringe benefit: shares provided to employees upon exercise of rights granted under an employee share scheme ). Question 6 The contribution of funds by Company A to the Trust in order to subscribe for, or acquire on market, Company A's Shares, and/or fund the ongoing administration of the Trust, is not a 'fringe benefit' within the meaning of that term in subsection 136(1) of the FBTAA. Detailed reasoning One benefit excluded from being a 'fringe benefit', pursuant to paragraph (ha) of subsection 136(1) of the FBTAA, is a benefit constituted by the acquisition of money or property by an employee share trust within the meaning in 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 is relevant. To qualify as an employee share trust, a trustee's activities must be limited to those described in paragraphs 130-85(4)(a), (b) and (c). Paragraph 130-85(4)(a) and (b) are satisfied because: • the Trust acquires shares in Company A, and •

the Trust ensures that ESS interests as defined in subsection 83A-10(1) (being options and rights in Company A) are provided under an employee share scheme (as defined in subsection 83A-10(2)) by allocating them to the employees in accordance with the Plan. 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 'merely incidental' 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'? .

Activities that result in employees being provided with additional benefits (such as the provision of financial assistance, including a loan to acquire the shares) are not considered to be merely incidental. In the present case, the Trust is in line with the definition of an employee share trust under section 130-85(4) because: • the Trust acquires shares in a company, namely Company A • the sole purpose being the acquisition, holding, and ongoing administration of holding Shares under the Plans is for the benefit of the Participants (see Clause XX of the Rules and Clause XX of the Trust Deed) • the Trust must be operated in accordance with the Plan Rules (see clause XX of the Trust Deed) • the Trust ensures that ESS interests as defined in subsection 83A-10(1) are provided under an employee share scheme (as defined in subsection 83A-10(2)) by allocating those shares to the employees in accordance with the Trust Deed and the Plans • the Trust Deed indicates that Company A and the Trustee agree the Trust will be managed and administered so that it satisfies the definition of 'employee share trust' for the purpose of subsection 130-85(4) (see clause XX of the Trust Deed), and •

the Commissioner accepts that the other activities undertaken by the Trustee will be merely incidental to this purpose under paragraph 130-85(4)(c). Based on the terms of Trust Deed, and provided the Trustee exercises its powers and obligations as set out in the Trust Deed, the Trust will be considered an employee share trust for the purposes of subsection 130-85(4). Therefore, the irretrievable cash contributions to the Trust to fund the subscription for, or acquisition on-market of, Shares will not be a fringe benefit within the meaning of subsection 136(1) of the FBTAA.