Fringe Benefits Tax - provision of a share or right to an employee by an entity that administers the employee share scheme is not a fringe benefit

Is the provision of a share or right under an employee share scheme by an entity that administers the employee share scheme to an employee or an associate of the employee not a fringe benefit because of paragraph 136(1)(ha) of the Fringe Benefits Assessment Tax 1986 (FBTAA)?

The provision of a share or right under an employee share scheme by an entity who administers the employee share scheme to an employee or an associate of the employee is not a fringe benefit because of paragraph 136(1)(ha) of the FBTAA.

The Employee Share Scheme complies with the provisions of Division 13A of the Income Tax Assessment Act 1936 (ITAA 1936).

An entity is appointed to administer the Scheme. The sole activities of the entity are obtaining shares or rights in the employer company or a holding company of the employer and providing those shares or rights to employees under the employee share scheme. Under the scheme, shares or rights are purchased, registered in the name of the entity and held for the benefit of participating employees until their entitlement. Upon entitlement, the entity distributes the shares or rights to the employees.

The definition of fringe benefit in paragraph 136(1)(ha) states that a benefit is not a fringe benefit where the benefit is constituted by the acquisition of the share or right under an employee share scheme within Division 13A of the ITAA 1936.

The employee acquires a beneficial or legal interest in a share or right, under Subdivision 139G of the ITAA 1936, which deals with acquisition of a share or right within Division 13A of the ITAA 1936.

The benefit, represented by the acquisition of the beneficial or legal interest in a share or right which is provided to the employee by the entity that administers the scheme under the employee share scheme is excluded as a benefit as defined under fringe benefit in paragraph 136(1)(ha) of the FBTAA.