Income tax: under an employee share acquisition scheme, fully paid shares with restrictions are allotted to a trustee to be held on behalf of an employee. Prior to the removal of the restrictions the employee receives a redundancy package which includes an ex-gratia payment representing the value of shares held by the trustee on the employee's behalf.

The ex-gratia payment is not assessable under section 26AAC as the acquisition of a share, for the purposes of section 26AAC, does not take place (see Case X43 90 ATC 354; (1990) 21 ATR 3377). The payment is not assessable under section 25(1) or section 26(e), and constitutes a capital receipt.

The payment is considered to be an eligible termination payment and is concessionally taxed as a bona fide redundancy payment in terms of section 27F.