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04 Dec 14 "Indeterminate right" under s 83A-340(1) ITAA 1997 - TD 2014/21

On 3 December 2014, the ATO issued Taxation Determination TD 2014/21 entitled "Income tax: where a right to acquire a beneficial interest in a share is granted subject to shareholder approval, is the right an 'indeterminate right' within the meaning of subsection 83A-340(1) of the Income Tax Assessment Act 1997?"

It was previously released in draft form as TD 2014/D16.

The Taxation Determination answers the question posed as follows:

"1. No. Where a right to acquire a beneficial interest in a share is granted subject to shareholder approval and the employee acquires only a right to have the matter put to the shareholders and nothing more, that right is not an 'indeterminate right' within the meaning of subsection 83A-340(1) of the Income Tax Assessment Act 1997 (ITAA 1997).

2. For the avoidance of doubt, prior to shareholder approval being given, such a right is not an ESS interest within the meaning of subsection 83A-10(1) of the ITAA 1997, as it is not yet a right to acquire a beneficial interest in a share.

3. This ruling also applies for the purposes of section 83A-15 of the Income Tax (Transitional Provisions) Act 1997 (ITTPA)."


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