Issue
Is a deduction available to the company taxpayer, for the issue of shares, pursuant to section 139DC of the Income Tax Assessment Act 1936 ('ITAA 1936')?
Decision
Yes, a deduction is available to the company taxpayer, for the issue of shares, pursuant to section 139DC of the ITAA 1936.
Facts
The taxpayer has several hundred employees. All permanent employees of the company are entitled to and have been allocated shares. The shares are qualifying shares under section 139CD of the ITAA 1936.
Reasons for Decision
A share is acquired under an Employee Share Scheme, if it is discounted below market value and is in respect of any employment provided by the taxpayer. Subsection 139DC(1) of the ITAA 1936 allows a deduction to a taxpayer who provides certain qualifying shares or qualifying rights.
Subsection 139CD(5) requires that greater than 75% of permanent employees are entitled to acquire shares or rights. All permanent employees of the company are entitled to and have been allocated shares. For the purposes of section 139CD of the ITAA 1936 the shares are qualifying shares.
The provider will be entitled to a deduction pursuant to section 139DC of the ITAA 1936.