When is a disposal restriction genuine? ATO clarifies taxing point for employee share schemes

As outlined by Albert Homarwijaya and Brian O'Donovan, having the guidance included in a binding public ruling (once finalised) will provide greater certainty for employers and employees seeking to apply these rules.

The Australian Taxation Office (ATO) has recently issued a draft taxation determination TD 2021/D5 which provides further clarification on when a disposal restriction can defer the taxing point on employee share scheme awards. Under the employee share scheme rules, where the grant of employee share scheme interests qualifies for tax deferral, the taxing point for the award typically occurs at exercise (for awards which are rights to acquire shares e.g. performance rights and options) or vest...

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Authors: Albert Homarwijaya, Brian O'Donovan

Published Date: 04 November 2021