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25 Sep 14 Meaning of "indeterminate right" - TD 2014/D16

On 24 September 2014, the ATO released for public consultation by 24 October 2014 draft Taxation Determination TD 2014/D16 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? "

The answer given to the question posed is as follows:

"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).

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.

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


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