Div 4Shares and options

Division 4—Shares and options 18—Inclusion of grant of shares and options as wages (1) For the purposes of this Act, wages include the grant of a share or an option to an employee by an employer in respect of services performed by the employee if the share or option is an ESS interest (within the meaning of section 83A–10 of the Income Tax Assessment Act 1997 of the Commonwealth) and is granted to the employee under an employee share scheme (within the meaning of that section). A grant of a share or an option to an employee by an employer that is not an ESS interest will be taxable as a fringe benefit under Division 2 of this Part. (2) Any such wages are taken, for the purpose of the imposition of payroll tax, to be paid or payable on the relevant day. (3) For the purposes of this Division, the relevant day is the day that the employer elects in accordance with this Division to treat as the day on which the wages are paid or payable. (4) To avoid doubt, the grant of a share or option is valuable consideration for the purposes of section 46. 19—Choice of relevant day (1) The employer can elect to treat as the relevant day either the date on which the share or option is granted to the employee or the vesting date. (2) A share or option is granted to a person if— (a) another person transfers the share or option to that person (other than, in the case of a share, by issuing the share to that person); or (b) in the case of a share—another person allots the share to that person; or (c) in the case of an option—another person confers the option on, or otherwise creates the option in, that person; or (d) the person otherwise acquires a legal interest in the share or option from another person; or (e) the person acquires a beneficial interest in the share or option from another person. (2a) To avoid doubt, if an employee acquires a right to be granted a share or an option, or some other material benefit, at the election of the employer, the share or option is not granted until the employer elects to grant the share or option. (3) The vesting date in respect of a share is one of the following dates (whichever happens first): (a) the date on which the share vests in the employee (that is, when any conditions applying to the grant of the share have been met and the employee's legal or beneficial interest in the share cannot be rescinded); (b) the date at the end of the period of 7 years from the date on which the share is granted to the employee. (4) The vesting date in respect of an option is one of the following dates (whichever happens first): (a) the date on which the share to which the option relates is granted to the employee; (b) the date on which the employee exercises a right under the option to have the share the subject of the option transferred to, allotted to or vested in him or her; (c) the date at the end of the period of 7 years from the date on which the option is granted to the employee. 20—Deemed choice of relevant day in special cases (1) If an employer grants a share or an option to an employee and the value of the grant of the share or option is not included in the taxable wages of the employer for the financial year in which the share or option was granted, the employer is taken to have elected to treat the wages constituted by the grant of that share or option as being paid or payable on the vesting date. (2) If an employer grants a share or an option to an employee and the value of the grant of the share or option is nil or, if the employer were to elect to treat the date of grant as the relevant day, the wages constituted by the grant would not be liable to payroll tax, the employer is taken to have elected to treat the wages constituted by the grant of that share or option as being paid or payable on the date on which the share or option was granted. 21—Effect of rescission, cancellation of share or option (1) If the grant of a share or option is withdrawn, cancelled or exchanged before the vesting date for any valuable consideration (other than the grant of other shares or options), the following provisions apply: (a) the date of withdrawal, cancellation or exchange is taken to be the vesting date of the share or option; (b) the market value of the share or option, on the vesting date, is taken to be the amount of the valuable consideration (and, accordingly, that amount is the amount paid or payable as wages on that date). (2) If an employer includes the value of a grant of a share or option in the taxable wages of the employer for a financial year and the grant is rescinded because the conditions attaching to the grant were not met, the taxable wages of the employer, in the financial year in which the grant is rescinded, are to be reduced by the value of the grant as previously included in the taxable wages of the employer. (3) Subsection (2) does not apply just because an employee fails to exercise an option or to otherwise exercise his or her rights in respect of a share or option. 22—Grant of share pursuant to exercise of option The grant of the share by an employer does not constitute wages for the purposes of this Act if the employer is required to grant the share as a consequence of the exercise of an option by a person and— (a) the grant of the option to the person constitutes wages for the purposes of this Act; or (b) the option was granted to the person before 1 July 2008. 23—Value of shares and options (1) If the grant of a share or option constitutes wages under this Division, the amount paid or payable as wages is taken, for the purposes of this Act, to be the value of the share or option (expressed in Australian currency) on the relevant day, less the consideration (if any) paid or given by the employee in respect of the share or option (other than consideration in the form of services performed). (2) The value of a share or an option is— (a) the market value; or (b) the amount determined as provided for by the Commonwealth income tax provisions. (3) The employer may elect the method by which the value of a share or an option is determined in any return lodged under this Act. (4) However, the Commissioner may determine the method by which the value of a share or an option is determined if the grant of the share or option is not included as wages in a return lodged by an employer as required by this Act. (5) In determining the market value of a share or option, anything that would prevent or restrict conversion of the share or option to money is to be disregarded. (6) The Commonwealth income tax provisions apply with the following modifications, and any other necessary modifications: (a) the value of an option is to be determined as if it were a right to acquire a beneficial interest in a share; (b) a reference to the acquisition of a beneficial interest in a share or right is to be read as a reference to the grant of a share or an option. (7) In this section— Commonwealth income tax provisions means section 83A–315 of the Income Tax Assessment Act 1997 of the Commonwealth and the regulations made for the purposes of that section. See Division 83A of the Income Tax Assessment Regulations 1997 of the Commonwealth for the relevant regulations. 24—Inclusion of shares and options granted to directors as wages (1) For the purposes of this Act, wages include the grant of a share or an option by a company to a director of the company who is not an employee of the company by way of remuneration for the appointment or services of the director. (2) For that purpose, the other provisions of this Division apply in respect of any such grant as if a reference to the employer were a reference to the company and a reference to the employee were a reference to the director of the company. (3) In this section, a reference to a director of the company includes a reference to the following: (a) a person who, under a contract or other arrangement, is to be appointed as a director of the company; (b) a former director of the company. Section 13 provides that a reference to an employee in this Act includes a reference to any person to whom any amount that is treated as wages under this Act is paid or payable. See also section 11, which deems the wages to be paid or payable for services performed. (4) However, if wages referred to in this section are fringe benefits, the value of the wages is to be determined in accordance with Division 2 of this Part (and not this Division). 26—Place where wages are payable (1) The wages constituted by the grant of the share or option are taken to be paid or payable in this jurisdiction if the share is a share in a local company or, in the case of an option, an option to acquire shares in a local company. (2) In any other case, the wages constituted by the grant of the share or option are taken to be paid or payable outside this jurisdiction. The place where wages are paid or payable is sometimes relevant to determining whether the wages are liable to payroll tax under this Act. See section 11. local company means— (a) a company incorporated or taken to be incorporated under the Corporations Act 2001 of the Commonwealth that is taken to be registered in this jurisdiction for the purposes of that Act; or (b) any other body corporate that is incorporated under an Act of this jurisdiction.