Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 83A.35

Reduction and income test

             (1)  Reduce the total amount included in your assessable income under subsection 83A- 25(1) for an income year by the total of the amounts included in your assessable income under that subsection, for the income year, for * ESS interests to which subsections (3) to (9) of this section apply.

             (2)  However:

                     (a)  do not reduce the total amount by more than $1,000; and

                     (b)  only make the reduction if the sum of the following does not exceed $180,000:

                              (i)  your taxable income for the income year (including any amount that would be included in your taxable income if you disregarded this section);

                             (ii)  your * reportable fringe benefits total for the income year;

                            (iii)  your * reportable superannuation contributions (if any) for the income year;

                            (iv)  your * total net investment loss for the income year.

Employment

             (3)  This subsection applies to an * ESS interest in a company if, when you acquire the interest, you are employed by:

                     (a)  the company; or

                     (b)  a * subsidiary of the company.

Employee share scheme relates only to ordinary shares

             (4)  This subsection applies to an * ESS interest you acquire under an * employee share scheme if, when you acquire the interest, all the ESS interests available for acquisition under the scheme relate to ordinary * shares.

Integrity rule about share trading and investment companies.

             (5)  This subsection applies to an * ESS interest in a company unless, when you acquire the interest:

                     (a)  the predominant business of the company (whether or not stated in its constituent documents) is the acquisition, sale or holding of * shares, securities or other investments (whether directly or indirectly through one or more companies, partnerships or trusts); and

                     (b)  you are employed by the company; and

                     (c)  you are also employed by any other company that is:

                              (i)  a * subsidiary of the first company; or

                             (ii)  a holding company (within the meaning of the Corporations Act 2001 ) of the first company; or

                            (iii)  a subsidiary of a holding company (within the meaning of the Corporations Act 2001 ) of the first company.

Scheme must be non-discriminatory

             (6)  This subsection applies to an * ESS interest you acquire under an * employee share scheme if, when you acquire the interest, both:

                     (a)  the employee share scheme; and

                     (b)  any scheme for the provision of financial assistance in respect of acquisitions of ESS interests under the employee share scheme;

are operated on a non-discriminatory basis in relation to at least 75% of the permanent employees of your employer who have completed at least 3 years of service (whether continuous or non-continuous) with your employer and who are Australian residents.

No risk of losing interest or share under the conditions of the scheme

             (7)  This subsection applies to an * ESS interest you acquire under an * employee share scheme if, when you acquire the interest:

                     (a)  if the ESS interest is a beneficial interest in a * share--there is no real risk that, under the conditions of the scheme, you will forfeit or lose the ESS interest (other than by disposing of it); or

                     (b)  if the ESS interest is a beneficial interest in a right to acquire a beneficial interest in a * share:

                              (i)  there is no real risk that, under the conditions of the scheme, you will forfeit or lose the ESS interest (other than by disposing of it, exercising the right or letting the right lapse); and

                             (ii)  there is no real risk that, under the conditions of the scheme, if you exercise the right, you will forfeit or lose the beneficial interest in the share (other than by disposing of it).

Minimum holding period

             (8)  This subsection applies to an * ESS interest you acquire under an * employee share scheme if, at all times during the period that:

                     (a)  starts when you acquire the interest; and

                     (b)  ends at the earlier of:

                              (i)  3 years later; and

                             (ii)  when you cease being employed by your employer;

the scheme is operated so that:

                     (c)  you are not permitted to dispose of:

                              (i)  any ESS interest (the scheme interest ) you acquire under the scheme; or

                             (ii)  a beneficial interest in a * share you acquire as a result of a scheme interest;

                            before the earlier of:

                            (iii)  the end of the period of 3 years after you acquire the scheme interest; and

                            (iv)  when you cease being employed by your employer; and

                     (d)  everyone else who acquires ESS interests under the scheme is subject to a corresponding restriction.

Note:          This subsection is taken to apply in the case of a takeover or restructure: see subsection 83A-130(3).

5% limit on shareholding and voting power

             (9)  This subsection applies to an * ESS interest in a company if, immediately after you acquire the interest:

                     (a)  you do not hold a beneficial interest in more than 5% of the * shares in the company; and

                     (b)  you are not in a position to cast, or to control the casting of, more than 5% of the maximum number of votes that might be cast at a general meeting of the company.

Guide to Subdivision 83A-C