1 Will the deferred taxing point happen to your remaining shares during the trading window?
1 No. The deferred taxing point will only happen to your remaining shares once they are no longer subject to genuine disposal restrictions. Your remaining shares continue to be subject to genuine disposal restrictions during the trading window as the Company's Board will not approve their sale within this period. This ruling applies for the following periods: Year ending 30 June 20YY Year ending 30 June 20YY The scheme commenced on: DD MM 20YY
You are an Australian resident for tax purposes. You have been employed by the Company as a X Director since DD MM 20YY. The Plan was approved by the shareholders on DD MM 20YY. You accepted Options under an Incentive Option Plan (the Plan) last approved by shareholders on DD MM 20YY. The Options Invitation Letter and in particular schedule X, sets out the terms and conditions of the Options and the Shares acquired on exercise of the Options. Letter of DD MM 20YY Schedule X Option Plan - Offer Document issued to you. The Board of Directors of the Company offers to you Options under its Incentive Option Plan on the terms of this offer letter (Offer). Terms used in this Offer have the same meaning as used in the Plan. The Company advised the following: • subject to the following, the Company is willing to offer you the following Options, with the following Option Exercise Price and Expiry Date, and subject to the following Vesting Conditions:
XXX unlisted Options exercisable at $XX each and expiring 5.00pm AEDT on DD MM 20YY and otherwise subject to the terms and conditions (including the vesting (milestone) conditions) set out in Schedule 2 to the Offer of Employment. • Unless the Plan provides otherwise, the Shares to which you are entitled on exercise of the Options will be issued to you as soon as practicable after the exercise date Provided the employee remained employed by the Company a total of XXX Options were to be issued as follows: • XXX Options to vest and become exercisable XX months after the date of issue; • XXX Options to vest and become exercisable XX months after the date of issue; and • XXX Options to vest and become exercisable XX months after the date of issue. On exercise of the vested Options, you were entitled to receive Shares in the Company. The Options were granted to you, for nil cash consideration, with an exercise price of $XX each. Your Options vested on the following dates: DD MM 20YY • XXX Options vested on DD MM 20YY; • XXX Options vested on DD MM 20YY; and
• XXX Options vested on DD MM 20YY. On DD MM 20YY, you exercised the full XXX Options using the cashless exercise facility provided for in clause X.x of the Plan and item X of Schedule X of the Invitation. Instead of receiving XXX shares for $XX, you received XXX shares for nil cash consideration. The shares were not disposed of at the time the Options were exercised. Due to the nature of your position, you were in possession of price sensitive information and subject to restrictions on trading their Shares pursuant to clause X.x of the trading Policy. The Company's Incentive Option Plan approved by shareholders on DD MM 20YY provides, (not exhaustive). Rule X.x XX XX XX If a Participant wishes to exercise some or all of their vested Options it may, subject to Board approval, elect to pay the Option Exercise Price by using the XX XX XX provided for under this Rule (XX XX XX).
The XX XX XX entitles a Participant to set-off the XX XX Price against the number of Shares which the Participant is entitled to receive upon exercise of the Participant's Options. By using the XX XXXX, the Participant will receive Shares to the value of the surplus after the XX XX Price has been set-off. Rule X.x XX Period, Takeover Restrictions and Insider Trading If the issue of Shares on exercise of an Option would otherwise fall within a XX Period, or breach the insider trading or takeover provisions of the Corporations Act, the Company may delay the issue of the Shares until X Business Days following the expiration, as applicable, of the X Period or the day on which the insider trading or takeover provisions no longer prevent the issue of the Shares. Rule X Restrictions on Dealing in Shares • the Board may at its discretion determine at any time up until exercise of Options, that a X period will apply to some or all of the Shares issued to a Participant on exercise of those Options up to a maximum of X years from the grant date of the Options.
• The board may, in its sole discretion, having regard to the circumstances at the time, waive the Xn period (rule X.x); and • A Participant must not dispose of or otherwise deal with any Shares issued to them under the Plan while they are subject to the X Period (rule X.x). The Company's Corporate Governance Plan Schedule X - Corporate Code of Conduct Clause X. Insider Trading All employees must observe the Company's " Trading Policy". In conjunction with the legal prohibition on dealing in the Company's securities when in possession of unpublished price sensitive information, the Company has established specific time periods when Directors, management and employees are only permitted to buy and sell the Company's securities. Schedule X - Continuous Disclosure Policy The Company must comply with continuous disclosure requirements arising from legislation and the ASX Listing Rules.
The general rule, in accordance with ASX Listing Rule X.x, is that once the Company becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price of value or the Company's securities, the Company must immediately disclose that information to the ASX. Price sensitive information is publicly released through ASX before it is disclosed to shareholders and market participants. Distribution of other information to shareholders and market participants is also managed through disclosure to the ASX. The importance of safeguarding the confidentiality of corporate information to avoid premature disclosure is paramount. If the ASX considers that here is, or is likely to be, a false market in the Company's securities and asks the Company to give the ASX information to correct or prevent a false market, the Company must immediately give that information to the ASX. Schedule X - Trading Policy The purpose of these guidelines is to assist Applicable Personnel to avoid conduct known as 'insider trading'. In some respects, the Company's policy extends beyond the strict requirement of the Corporations Act 2001 (Cth).
Rule X provides that applicable Personnel must not, except in exceptional circumstances, deal in securities or derivatives of the Company during the following periods: • X weeks prior to, and X hours after the release of the Company's X report, X report and X reports. • If any application personnel are in possession of X X information which is not generally available to the market, then they must not deal in the Company's securities at any time it is in possession of such information. • Applicable personnel should never engage in X trading, except for exercise of options where the shares will be sold shortly thereafter. • The X Secretary will endeavour to notify all appliable personnel of the times when they are not permitted to buy or sell the Company's securities.
On DD MM 20YY the Company confirmed, that since acquiring the Shares, you have been in possession of price sensitive information that is not available to the market, and that trading Company shares would be a breach of Clause X.x of the X Policy. In the letter, the Company advised that the first available trading window would be X days after the release of the Annual Report to the market which was expected to be before DD MM 20YY. Any disposal of the Shares would still require written approval from the Board of the Company in accordance with Clause X.x(x) of the X Policy. On DD MM 20YY, the Company, wrote to you advising it was envisaged that the price sensitive information that you had knowledge of would be released to the market in early MM 20YY. However, during the X trading window, the X X information was not made available to the public. As a result, you were not permitted to trade the Shares. The X X information has still not been made available to the public as at the date of this private ruling application. On DD MM 20YY you wrote to the Board Chairman, of the Company, seeking the Board's approval to sell up to XXX shares.
Response from the Company on DD MM 20YY, advising that while the company was no longer in the X period, the company had some announcements coming out that prevent the company from opening the trading window. You would be informed when the trading window was open. On DD MM 20YY you wrote to the X Chairman, the Company, for details about whether you were still restricted from trading the shares, due to market sensitive announcements, and referred to correspondence date DD MM 20YY. On DD MM 20YY, the Company advised you, in writing, that you must obtain the Board's approval prior to selling any shares, and referring you to the Company's Share Trading Policy. You were advised that the company hoped to open a trading window when the current issue was resolved, but you would only be permitted to sell a portion of your shareholding. You were advised that the restriction is due to the size of your holding and the limited liquidity in the Company's shares. The final scale of permitted selling will be reviewed by the board at the time of the trading window was opened.
The Company wrote to you on DD MM 20YY to advise that they had not been able to open a share trading window as communicated to you on DD MM 20YY. The Board determined that it is unable to open a trading window unless it is agreed, by you, that a smaller parcel of shares can be sold within the trading window not exceeding X% of the average daily volume. The Company will open a trading window for you once you nominate an acceptable number of shares that you want to sell. The right to sell during the trading window will only apply to those nominated shares and not to the remainder of your holding (the remaining shares). The trading window will only be open during the year ending DD MM 20YY.
Income Tax Assessment Act 1997 Division 83A Income Tax Assessment Act 1997 Subdivision 83A-C Income Tax Assessment Act 1997 Section 83A-120 Does IVA apply to this private ruling? No
Genuinely restricted For the purposes of Division 83A of the ITAA 1997, the term 'genuinely restricted' is not defined and therefore takes on its ordinary meaning. The term is explained in Taxation Determination 2022/4 Income tax: when are you genuinely restricted from immediately disposing of an interest provided under an employee share scheme? which sets out the Commissioner's view for working out when a scheme's disposal restrictions were genuine disposal restrictions and when the taxpayer would no longer be 'genuinely restricted' by the scheme for the purposes of determining the deferred taxing point. Paragraph 21 of TD 2022/4 states in order for a genuine disposal restriction to occur, the scheme's restriction must control or limit the power or right to (voluntarily or compulsorily) sell, transfer, assign, deal with, make over or part with the ESS interest (whether legally or beneficially). Paragraph 23 of TD 2022/4 explains that the scheme's genuine disposal restrictions may be contained in documents that you are required to comply with to participate in the scheme, such as: • the scheme rules • the offer document
• other governing documents of the scheme • documented company policies, or • your employment contract. Paragraph 26 of TD 2022/4 provides the scheme's genuine disposal restrictions may prevent you from disposing of your ESS interest when you possess price-sensitive information. Such a restriction will usually exist together with a company's other documented rules (for example, an internal share trading policy) which prevent or restrict the company's employees from disposing of their interests in the company. To be a genuine disposal restriction, you must: • have, or be able to obtain, objective evidence that reasonably shows how the information you held prevented you from immediately disposing of your ESS interest, and • show that you held that information at all times when you were otherwise able to dispose of your interest.
As explained in paragraph 29 of TD 2022/4, you will no longer be restricted on the first date on which you have an opportunity to dispose of your ESS interest. This will be the first time you can take some action to deal with or realise your ESS interest (for example, by way of sale, transfer or gift).