Commonwealth Numbered Acts

TAXATION LAWS AMENDMENT ACT (No. 2) 1995No. 169, 1995 - SCHEDULE 2

                         SCHEDULE 2                      Section 3

EMPLOYEE SHARE SCHEMES
PART 1-INCOME TAX ASSESSMENT ACT 1936
Division 1-Insertion of Division 13A in Part III 1. After Division 13 of Part
III: Insert:

"Division 13A-Employee share schemes

"Subdivision A-Key principle and overview of Division The key principle

"139. This Division provides for the taxation treatment of shares and rights
acquired under employee share schemes. Any discount from the market price of
the shares or rights is assessable. However, 2 alternative concessions are
available for shares or rights provided under schemes that satisfy certain
requirements. The first concession is that the discount will not be included
in the employee's assessable income until a later year of income. The second
concession is that the employee may make an election that reduces the amount
assessed. Additional requirements must be satisfied to obtain this concession.
Overview of Division

"139A. The following table summarises the contents of this Division:
OVERVIEW
Subdivision Coverage
  A            Key principle and overview

  B            The basic requirement that the discount be included in

assessable income
  C            Key concepts: employee share scheme, discount,

cessation time, qualifying shares, qualifying rights
and exemption conditions
  D            Special provisions

  E            Elections

  F            Special provisions about the market value of a share or

right
  G            Definitions (including a list of all terms defined in

the Division)

"Subdivision B-Inclusion of discount in assessable income Discount to be
included in assessable income

"139B.(1) If a taxpayer has acquired a share or right under an employee share
scheme, the assessable income of the taxpayer includes the discount given in
relation to the share or right.
Note:     Employee share scheme is defined in section 139C.
When the discount is to be included

"(2) Unless subsection (3) applies, the discount is included in the taxpayer's
assessable income of the year of income in which the share or right is
acquired.

"(3) If the share or right is a qualifying share or right and the taxpayer has
not made an election under section 139E for the year of income in which the
share or right is acquired, the discount is included in the taxpayer's
assessable income of the year of income in which the cessation time (see
sections 139CA and 139CB) occurs. Reduction of amounts included-elections

"139BA.(1) This section applies if a taxpayer has made an election under
section 139E for a year of income and the exemption conditions (see section
139CE) are satisfied in relation to shares or rights covered by the election.
It applies to the total amount otherwise included in a taxpayer's assessable
income for the year of income under section 139B in respect of those shares or
rights.

"(2) The total amount is only included in the assessable income to the extent
that it is greater than $500.

"Subdivision C-Key concepts: employee share scheme, discount,
cessation time, qualifying shares and rights and
exemption conditions Employee share schemes

"139C.(1) A taxpayer acquires a share or right under an employee share scheme
if the share or right is acquired by the taxpayer in respect of, or for or in
relation directly or indirectly to, any employment of the taxpayer or an
associate of the taxpayer.

"(2) A taxpayer acquires a share or right under an employee share scheme if
the share or right is acquired by the taxpayer in respect of, or for or in
relation directly or indirectly to, any services provided by the taxpayer or
an associate of the taxpayer.

"(3) The taxpayer does not acquire a share or right under an employee share
scheme if the consideration for the acquisition is equal to, or more than, the
market value of the share or right at the time that it is acquired.

"(4) The taxpayer does not acquire a share under an employee share scheme if
the taxpayer acquires the share as the result of exercising a right that the
taxpayer acquired under an employee share scheme.

"(5) The taxpayer does not acquire a share or right under an employee share
scheme if the taxpayer is a trust whose sole activities are obtaining shares,
or rights to acquire shares, and providing those shares or rights to employees
of a company or to associates of those employees. Cessation time-shares

"139CA.(1) The cessation time for a share is the time when the taxpayer
acquires the share if:

   (a)  there is no restriction preventing the taxpayer from disposing of the
        share before a particular time; and

   (b)  the scheme under which the share was acquired did not have any
        conditions that could result in the taxpayer forfeiting ownership of
        the share.

"(2) If subsection (1) does not apply, the cessation time for a share is the
earliest of the following:

   (a)  the time when the taxpayer disposes of the share;

   (b)  the later of:

   (i)  the time when any restriction preventing the taxpayer from disposing
        of the share ceases to have effect; and

   (ii) the time when any condition that could result in the taxpayer
        forfeiting ownership of shares ceases to have effect;

   (c)  the time when the employment in respect of which the share was
        acquired ceases;

   (d)  the end of the 10 year period starting when the taxpayer acquired the
        share.

"(3) For the purposes of subsection (2), a taxpayer only ceases the employment
in respect of which the share was acquired when the taxpayer is no longer
employed by any of the following:

   (a)  the employer of the taxpayer in that employment;

   (b)  a holding company of the employer;

   (c)  a subsidiary of the employer or of a holding company of the employer.
        Cessation time-rights

"139CB.(1) The cessation time for a right is the earliest of the following:

   (a)  the time when the taxpayer disposes of the right (other than by
        exercising it);

   (b)  the time when the employment in respect of which the right was
        acquired ceases;

   (c)  if the right is exercised and there is a restriction preventing the
        taxpayer from disposing of the share acquired as a result of the
        exercise of the right or a condition that could result in the taxpayer
        forfeiting ownership of the share-the time when the last such
        restriction or condition ceases to have effect;

   (d)  if the right is exercised and there is no such restriction or
        condition-the time when the right is exercised;

   (e)  the end of the 10 year period starting when the taxpayer acquired the
        right.

"(2) For the purposes of subsection (1), a taxpayer only ceases the employment
in respect of which the right was acquired when the taxpayer is no longer
employed by any of the following:

   (a)  the employer of the taxpayer in that employment;

   (b)  a holding company of the employer;

   (c)  a subsidiary of the employer or of a holding company of the employer.
        Calculation of discount

"139CC.(1) This section sets out how to calculate the discount given in
relation to a share or right. Case 1-discount covered by subsection 139B(2)

"(2) If subsection 139B(2) applies to the discount, the discount is the market
value of the share or right at the time when it was acquired by the taxpayer
less any consideration paid or given by the taxpayer as consideration for the
acquisition of the share or right. Case 2-discount covered by subsection
139B(3)-share or right disposed of at arm's length within 30 days

"(3) If subsection 139B(3) applies to the discount, and the share or right (or
any share acquired as a result of the exercise of the right) is disposed of by
the taxpayer in an arm's length transaction at the cessation time or within 30
days after the cessation time, the discount is:

   (a)  the amount or value of any consideration received by the taxpayer for
        the disposal; reduced by:

   (b)  the amount or value of any consideration paid or given by the taxpayer
        as consideration for the acquisition of the share or right; and

   (c)  for a right that has been exercised-the amount or value of any
        consideration paid or given to exercise the right. Case 3-discount
        covered by subsection 139B(3)-share or right not disposed of at arm's
        length within 30 days

"(4) If subsection 139B(3) applies to the discount, and the share or right (or
any share acquired as a result of the exercise of the right) is not disposed
of by the taxpayer in an arm's length transaction at the cessation time or
within 30 days after the cessation time, the discount is:

   (a)  the market value of the share or right (or the share acquired as a
        result of the exercise of the right) at the cessation time; reduced
        by:

   (b)  the amount of any consideration paid or given by the taxpayer as
        consideration for the acquisition of the share or right; and

   (c)  for a right that has been exercised-the amount of any consideration
        paid or given by the taxpayer to exercise the right. Meaning of
        qualifying shares and qualifying rights

"139CD.(1) For the purposes of this Division:

   (a)  a share in a company is a qualifying share if the 6 conditions below
        are satisfied; and

   (b)  a right to acquire a share in a company is a qualifying right if the
        first, second, third, fifth and sixth of the 6 conditions below are
        satisfied. Note: Section 139DF excludes certain shares from being
        qualifying shares.

"(2) The first condition is that the share or right is acquired by a taxpayer
under an employee share scheme.

"(3) The second condition is that the company is the employer of the taxpayer
or a holding company of the employer of the taxpayer.

"(4) The third condition is that all the shares available for acquisition
under the scheme are ordinary shares and all the rights available for
acquisition under the scheme are rights to acquire ordinary shares.

"(5) The fourth condition is that, at the time the share was acquired, at
least 75% of the employees of the employer were, or at some earlier time had
been, entitled to acquire:

   (a)  shares or rights under the scheme; or

   (b)  shares or rights in the employer, or a holding company of the
        employer, under another employee share scheme.

"(6) The fifth condition is that, immediately after the acquisition of the
share or right, the taxpayer does not hold a legal or beneficial interest in
more than 5% of the shares in the company.

"(7) The sixth condition is that, immediately after the acquisition of the
share or right, the taxpayer is not in a position to cast, or control the
casting of, more than 5% of the maximum number of votes that might be cast at
a general meeting of the company.

"(8) The Commissioner may determine that the fourth condition (see subsection
(5)) is taken to have been satisfied in relation to a share or a right if the
Commissioner considers that the employer has done everything reasonably
practicable to ensure that the condition was satisfied. Exemption conditions

"139CE.(1) This section sets out the 3 exemption conditions that must be
satisfied for section 139BA to apply to a share or right acquired under an
employee share scheme.

"(2) The first condition is that the scheme did not have any conditions that
could result in any recipient forfeiting ownership of shares or rights
acquired under it.

"(3) The second condition is that the scheme was operated so that no recipient
would be permitted to dispose of a share or right (the scheme share or scheme
right) acquired under it, or of a share acquired as a result of a scheme
right, before the earlier of the following times:

   (a)  the end of the period of 3 years after the time of the acquisition of
        the scheme share or scheme right;

   (b)  the time when the taxpayer ceased, or first ceased, to be employed by
        the employer.

"(4) The third condition is that both the employee share scheme and any scheme
for the provision of financial assistance in respect of acquisitions of shares
or rights under the employee share scheme are operated on a non-discriminatory
basis (see section 139GE).

"(5) For the purposes of subsection (3), a taxpayer only ceases the employment
in respect of which the share or right was acquired when the taxpayer is no
longer employed by any of the following:

   (a)  the employer of the taxpayer in that employment;

   (b)  a holding company of the employer;

   (c)  a subsidiary of the employer or of a holding company of the employer.

"Subdivision D-Special provisions Discount assessable to associate if share
acquired by taxpayer in respect of associate's employment

"139D.(1) This section applies if:

   (a)  a taxpayer has acquired a share or right under an employee share
        scheme; and

   (b)  the share or right was acquired by the taxpayer in respect of, or for
        or in relation directly or indirectly to, any employment of, or
        services rendered by, an associate of the taxpayer; and

   (c)  apart from this section, an amount would be included in respect of the
        acquisition in the assessable income of the taxpayer of a year of
        income under this Division.

"(2) If this section applies, the amount is included in the associate's
assessable income of the year of income instead of in the taxpayer's
assessable income. Acquisition of legal interest in shares or rights- certain
discounts not assessable

"139DA. If:

   (a)  a taxpayer has acquired the legal interest in a share or right; and

   (b)  the taxpayer, or an associate of the taxpayer, is required to include
        an amount under section 139B in the taxpayer's or the associate's
        assessable income as a result of the acquisition; and

   (c)  the taxpayer, or the associate, is, or would apart from section 139BA
        be, required to include an amount under section 139B in his or her
        assessable income as a result of the acquisition of the beneficial
        interest in the share or right; the taxpayer, or the associate, is not
        required to include the amount mentioned in paragraph (b). No
        deduction until share or right acquired

"139DB. If, at a particular time, a person (the provider) provides another
person with money or other property:

   (a)  under an arrangement; and

   (b)  for the purpose of enabling another person (the ultimate beneficiary)
        to acquire, directly or indirectly, a share or right, under an
        employee share scheme; then, for the purpose of determining when any
        deduction is allowable to the provider in respect of provision of the
        money or other property, the provider is taken to have provided it not
        before the time when the ultimate beneficiary acquires the share or
        right.
Note:     The amount included in assessable income for the acquisition
of an interest in a share is the same as for the acquisition of the share-see
Subdivision F and section 139G. Deduction for provider of certain qualifying
shares or rights

"139DC.(1) A taxpayer is entitled to an allowable deduction in the taxpayer's
assessment in respect of income of a year of income (the benefit year) if the
taxpayer provides one or more qualifying shares or qualifying rights to
another person in the benefit year that satisfy the following conditions:

   (a)  the exemption conditions (see section 139CE);

   (b)  the condition that no amount has been allowed, is allowable, or will
        be allowable, as a deduction in the assessment of the taxpayer in
        respect of income of any year of income in respect of expenditure
        incurred in providing the share or right.

"(2) The amount of the deduction in respect of the shares or rights provided
by the taxpayer to the person in the benefit year is the lesser of:

   (a)  $500; and

   (b)  the sum of the market values, at the time that the share or right is
        provided, of each qualifying share or qualifying right that satisfies
        the conditions in subsection (1) reduced by the sum of any amounts
        paid by the person as consideration for those shares or rights.
Note:     Only one deduction is allowable under this section in
respect of each person to whom the taxpayer provided shares or rights in a
year. No benefit where rights lost

"139DD.(1) For the purposes of this Division, a right to acquire a share in a
company is never acquired by a taxpayer if the following 2 requirements are
satisfied.

"(2) The first requirement is that the taxpayer loses the right without having
exercised it.

"(3) The second requirement is that the company is the employer of the
taxpayer or a holding company of the employer of the taxpayer.

"(4) Section 170 does not prevent the amendment of an assessment at any time
for the purpose of giving effect to this section. Amount not assessable under
section 21A or paragraph 26(e)

"139DE. Section 21A and paragraph 26(e) do not apply to:

   (a)  a share or right that a taxpayer acquires under an employee share
        scheme; or

   (b)  any share acquired by a taxpayer as a result of a right covered by
        paragraph (a). Anti-avoidance-certain shares and rights not qualifying
        shares and qualifying rights

"139DF.(1) Despite any other provision of this Part, a share in a company, or
a right to acquire a share in a company, acquired by a taxpayer is not a
qualifying share or right if:

   (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)  the taxpayer is employed by the company and is also employed by
        another company; and

   (c)  the company and the other company are members of the same company
        group.

"(2) A company is a member of the same company group as another company if one
of the companies is a holding company of the other or if another company is a
holding company of both companies.

"Subdivision E-Elections Taxpayer may make election

"139E.(1) A taxpayer may make an election under this section that subsection
139B(2) applies for a year of income. The election covers each qualifying
share or qualifying right acquired in that year by the taxpayer. How and when
election must be made

"(2) The election must be in writing in a form approved by the Commissioner
and be made before the taxpayer lodges his or her return of income for the
year of income, or within such further time as the Commissioner allows.

"Subdivision F-Special provisions about the market value
of a share or right Meaning of market value of a share or right

"139F. This Subdivision sets out how to determine the market value of a share
or right to acquire a share on a particular day. Listed shares or
rights-market value

"139FA. If the share or right is quoted on a stock market of an approved stock
exchange on that day, the market value is:

   (a)  if there was at least one transaction on that stock market in shares
        or rights of that class during the one week period before that day-the
        weighted average of the prices at which those shares or rights were
        traded on that stock market during the one week period before that
        day; or

   (b)  if there were no transactions on that stock market in that one week
        period in such shares or rights-the last price at which an offer was
        made on that stock market in that period to buy such a share or right.
        Unlisted shares-market value

"139FB.(1) If the share is not quoted on an approved stock exchange on that
day, the market value is the arm's length value of the share:

   (a)  as specified in a written report, in a form approved by the
        Commissioner, given to the person from whom the taxpayer acquires the
        share by a person who is a qualified person in relation to valuing the
        share (see section 139FG); or

   (b)  as calculated in accordance with any other method approved in writing
        by the Commissioner as a reasonable method of calculating the arm's
        length value of unlisted shares. Partly paid unlisted shares

"(2) Without limiting the factors that must be taken into account in valuing,
under paragraph (1)(a), a share that is partly paid, the qualified person must
take into account:

   (a)  the amount of the par value of the share that is already paid; and

   (b)  the amount and timing of future calls; and

   (c)  rights to dividends that arise from holding the share. Unlisted
        rights-market value

"139FC. If the right is not quoted on an approved stock exchange on that day,
the market value is the greater of:

   (a)  the market value, on the particular day, of the share that may be
        acquired by exercising the right, less the lowest amount that must be
        paid to exercise the right to acquire the share; and whichever of the
        following applies:

   (b)  if the right can not be exercised more than 10 years after the day
        when the right was acquired-subject to section 139FE, the value
        determined in accordance with regulations for the purpose of this
        paragraph or, if no such regulations are in force, the value
        determined in accordance with sections 139FJ to 139FN;

   (c)  if the right can be exercised more than 10 years after the day when
        the right was acquired-the greater of:

   (i)  the arm's length value of the right as specified in a written report,
        in a form approved by the Commissioner, given to the person from whom
        the taxpayer acquires the right by a suitably qualified valuer; and

   (ii) the value that would have been determined under paragraph (b) if the
        right could be exercised 10 years after the particular day. Conditions
        and restrictions to be disregarded

"139FD. In determining the market value of a share or right under section
139FB or 139FC, the share or right, and any share that may be acquired as a
consequence of the exercise or operation of the right, is taken not to be
subject to any conditions or restrictions. Value of right nil or can not be
determined

"139FE. If the lowest amount that must be paid to exercise a right to acquire
a share is nil or can not be determined, the market value of the right on a
particular day is the same as the market value of the share on that day. Value
of legal and beneficial interests

"139FF. To avoid doubt, if a person acquires either the beneficial interest or
the legal interest in a share or right, the value that is applicable for the
purposes of this Division is the value of the share or right, not the value of
the interest in the share or right. Notes: 1. It is the value of the share or
right that is relevant because the taxpayer is taken to have acquired the
share or right-see section 139G.
2. Double taxation is avoided by section 139DA. Meaning of qualified person

"139FG. A person is a qualified person in relation to valuing a share in a
company if the person is registered as a company auditor under a law in force
in a State or a Territory, and is not:

   (a)  a director, secretary or employee of the company; or

   (b)  a partner, employer or employee of a person referred to in paragraph
        (a); or

   (c)  a partner or employee of an employee of a person so referred to.
        Meaning of published price where multiple quotation

"139FH. If a share or right is quoted on a day on 2 or more approved stock
markets, the published price on that day of that share or right is the
published price on whichever of those stock markets is nominated by the
taxpayer. Provision of information about market value

"139FI. If a taxpayer requests the person from whom he or she acquired a share
or right to provide information necessary for the taxpayer to calculate the
market value of the share or right at a particular time, the person must take
all reasonable steps to provide that information within 30 days after the
request. Outline of remainder of Subdivision

"139FJ. The remainder of this Subdivision sets out the method of calculating,
for the purposes of paragraph 139FC(b), the market value, on a particular day,
of a right to acquire a share. Step 1-calculate the calculation percentage

"139FK. Apply the following formula. The result is the calculation percentage.
Market value, on the particular
day, of the share that is the
        subject of the right              x        100%

Amount, or lowest amount, that
must be paid to exercise the right Step 2-how to use calculation percentage If
calculation percentage is less than 50%

"139FL.(1) If the calculation percentage is less than 50%, the market value of
the right is nil. If calculation percentage is equal to or greater than 50%
but less than 110%

"(2) If the calculation percentage is equal to, or greater than, 50% but less
than 110%, go to the instructions for using Table 1 in section 139FM that are
set out below that Table. If calculation percentage is equal to or greater
than 110%

"(3) If the calculation percentage is equal to, or greater than, 110%, go to
the instructions for using Table 2 in section 139FN that are set out below
that Table. Table 1 and instructions Table 1

"139FM.(1) The following is Table 1:
Calculation percentage Exercise period (months)
50% to 60% to 70% to 75% to 80% to 85% to 90% to 92.5%
           60%    70%    75%    80%    85%    90%    92.5%  to 95%

108 to 120 0.6%   2.1%   4.8%   6.7%   8.9%   11.4%  14.1%  15.5%

96 to 108  0.4%   1.5%   4.0%   5.8%   7.9%   10.3%  13.0%  14.5%

84 to 96   0.2%   1.1%   3.2%   4.8%   6.8%   9.2%   11.8%  13.3%

72 to 84   0.1%   0.7%   2.4%   3.8%   5.6%   7.9%   10.5%  11.9%

60 to 72   0.0%   0.4%   1.6%   2.8%   4.4%   6.5%   9.0%   10.4%

48 to 60   0.0%   0.1%   0.9%   1.8%   3.1%   4.9%   7.3%   8.6%

36 to 48   0.0%   0.0%   0.4%   0.9%   1.9%   3.3%   5.4%   6.6%

24 to 36   0.0%   0.0%   0.1%   0.3%   0.8%   1.8%   3.4%   4.4%

18 to 24   0.0%   0.0%   0.0%   0.1%   0.4%   1.0%   2.3%   3.2%

12 to 18   0.0%   0.0%   0.0%   0.0%   0.1%   0.4%   1.3%   2.0%

9 to 12    0.0%   0.0%   0.0%   0.0%   0.0%   0.2%   0.8%   1.3%

6 to 9     0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.3%   0.7%

3 to 6     0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.2%

0 to 3     0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.0%   0.0%

Calculation percentage Exercise period (months)
95% to 97.5% to 100% to 102.5% to 105% to 107.5% to
           97.5%  100%     102.5%  105%      107.5%  110%

108 to 120 16.9%  18.4%    20.0%   21.5%     23.1%   24.7%

96 to 108  15.9%    17.5%    19.0%    20.6%    22.2%    23.9%

84 to 96   14.8%    16.3%    17.9%    19.5%    21.2%    22.9%

72 to 84   13.4%    15.0%    16.6%    18.2%    19.9%    21.7%

60 to 72   11.8%    13.4%    15.0%    16.7%    18.5%    20.3%

48 to 60   10.1%    11.6%    13.2%    14.9%    16.7%    18.6%

36 to 48   8.0%     9.5%     11.1%    12.9%    14.7%    16.5%

24 to 36   5.7%     7.1%     8.7%     10.4%    12.2%    14.1%

18 to 24   4.4%     5.7%     7.2%     8.9%     10.8%    12.7%

12 to 18   2.9%     4.1%     5.6%     7.3%     9.1%     11.2%

9 to 12    2.2%     3.3%     4.7%     6.3%     8.2%     10.3%

6 to 9     1.4%     2.3%     3.6%     5.3%     7.2%     9.4%

3 to 6     0.5%     1.2%     2.4%     4.1%     6.1%     8.4%

0 to 3     0.1%     0.4%     1.3%     3.0%     5.3%     7.8%
Instructions for using Table 1

"(2) From Table 1, select the percentage (the Table 1 percentage) that
corresponds to:

   (a)  the period, in months, from the particular day until the last day on
        which the right may be exercised (the exercise period); and

   (b)  the calculation percentage; and then multiply the amount, or lowest
        amount, that must be paid to exercise the right by the Table 1
        percentage. The result is the market value of the right. Table 2 and
        instructions Table 2

"139FN.(1) The following is Table 2: Exercise period
(months)           Column 1       Column 2

108 to 120         24.7%           0.6%

96 to 108          23.9%           0.6%

84 to 96           22.9%           0.7%

72 to 84           21.7%           0.7%

60 to 72           20.3%           0.7%

48 to 60           18.6%           0.7%

36 to 48           16.5%           0.8%

24 to 36           14.1%           0.8%

18 to 24           12.7%           0.8%

12 to 18           11.2%           0.9%

9 to 12            10.3%           0.9%

6 to 9             9.4%            0.9%

3 to 6             8.4%            0.9%

0 to 3             7.8%            1.0%
Instructions for using Table 2-calculating the base percentage

"(2) From column 1 of Table 2, select the percentage that corresponds to the
period, in months, from the particular day until the last day on which the
right may be exercised. This percentage is called the base percentage.
Instructions for using Table 2-calculating the additional percentage

"(3) From column 2 of Table 2, select the percentage that corresponds to the
exercise period (the exercise period). This percentage is called the
additional percentage. Instructions for using Table 2-calculating the excess

"(4) Work out the result of the following formula. Disregard any fraction. The
result is called the excess.
           100  x   (Calculation percentage   -   110%)
Instructions for using Table 2-calculating the market value

"(5) The market value of the right is the amount worked out using the
following formula:
Amount or lowest
    amount that must be        x (Base        +(Excess x Additional))

  paid to exercise the right     (percentage   (                   ))
Note: If:

   (a)  the exercise period; or

   (b)  the calculation percentage in relation to a particular right; is the
        top of one range in Table 1 or 2 and is also the bottom of another
        range in that Table, it is taken to be in the lower range and not in
        the higher range.

"Subdivision G-Definitions Meaning of acquiring or providing a share or right

"139G. A person acquires a share or right if:

   (a)  another person transfers the share or right 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 a right-another person creates the right in that
        person; or

   (d)  the person otherwise acquires a legal interest in the share or right
        from another person; or

   (e)  the person acquires a beneficial interest in the share or right from
        another person. In those circumstances, the other person provides the
        share or right. Meaning of employee and employer

"139GA. The expressions employee and employer have the same meanings as in
section 221A. Meaning of permanent employee

"139GB.(1) Subject to subsections (2) and (3), permanent employee of a company
is:

   (a)  a full-time employee of the company; or

   (b)  a permanent part-time employee of the company; with at least 36 months
        service (whether continuous or non-continuous).

"(2) A person is not a permanent employee of the company at any time when the
person is a director of the company.

"(3) A person is not a permanent employee at any time when the person:

   (a)  is an exempt visitor within the meaning of section 517 of the
        Income Tax Assessment Act 1936; or

   (b)  is not a resident within the meaning of that Act; or

   (c)  is not physically present in Australia.

"(4) For the purposes of subsection (1), the length of a person's service
includes any period when the person is, in accordance with the terms and
conditions of that service:

   (a)  absent on recreation leave; or

   (b)  absent from work because of accident or illness.

"(5) In paragraph (4)(a), recreation leave does not include:

   (a)  long service leave, furlough, extended leave or leave of a similar
        kind (however described); or

   (b)  leave without pay or on reduced pay. Meaning of holding company

"139GC. The expression holding company has the same meaning as in the
Corporations Law. Meaning of approved stock exchange

"139GD. A stock exchange is an approved stock exchange if:

   (a)  the stock exchange is named in regulations made for the purposes of
        this section; or

   (b)  if no such regulations are in force-the stock exchange is an approved
        stock exchange within the meaning of Part XI. Meaning of associate

"139GE. The expression associate has the same meaning as it would have in
section 26AAB if:

   (a)  the following paragraph were inserted before paragraph (14)(a) of that
        section:

"(aa) a company where the taxpayer holds (whether directly or indirectly
through one or more interposed companies, partnerships or trusts) a share in
the company, or a right to acquire a share in the company;"; and

   (b)  'paragraph (a)' wherever occurring in subsection (14) were omitted and
        'paragraph (aa) or (a)' were substituted. Meaning of conducting a
        scheme on a non-discriminatory basis

"139GF.(1) This section sets out the conditions that must be satisfied for the
employee share scheme mentioned in subsection 139CE(4) or a scheme for the
provision of financial assistance in respect of acquisitions of shares or
rights under the employee share scheme to be operated on a non-discriminatory
basis. Non-discriminatory employee share scheme

"(2) The employee share scheme is operated on a non-discriminatory basis if,
and only if, the following conditions are satisfied in relation to all offers
to acquire shares or rights under the scheme:

   (a)  participation in the scheme is open to at least 75% of permanent
        employees of the employer;

   (b)  the time for acceptance of each offer is reasonable;

   (c)  the essential features of each offer are the same for at least 75% of
        permanent employees of the employer. Essential features of offer

"(3) The essential features of an offer for an employee share scheme are:

   (a)  the consideration for the acquisition of the share or right concerned
        (whether that consideration is determined by reference to the value of
        the share or right or otherwise); and

   (b)  the number of shares or rights, the minimum number of shares or rights
        or the maximum number of shares or rights, offered to each employee,
        as the case may be; and

   (c)  the time for acceptance of the offer; and

   (d)  the steps taken for the circulation of information about the offer.
        Non-discriminatory financial assistance schemes

"(4) The scheme for the provision of financial assistance in respect of
acquisitions of shares or rights under the employee share scheme is operated
on a non-discriminatory basis if, and only if, the following conditions are
satisfied in relation to all financial assistance provided under the scheme:

   (a)  the time for taking up each offer of assistance is reasonable;

   (b)  the essential features of each offer of assistance are the same for at
        least 75% of permanent employees of the employer. Essential features
        of offer of financial assistance

"(5) The essential features of an offer of financial assistance are:

   (a)  the terms and conditions of the offer; and

   (b)  the amount, the minimum amount, or the maximum amount, of assistance
        offered to each employee, as the case may be.

"(6) The Commissioner may determine that the condition mentioned in paragraph
(2)(a), (2)(c) or (4)(b) is taken to have been satisfied in relation to a
scheme if the Commissioner considers that the employer has done everything
reasonably practicable to ensure that the condition was satisfied. Meaning of
provision of financial assistance

"139GG. The expression provision of financial assistance includes the making
of a loan, giving of a guarantee, provision of security, release of an
obligation and forgiving of a debt. Index of definitions

"139GH. The following table lists the definitions in this Division and shows
their location:
Definition                   Provision

Acquiring a share or right   139G

Approved stock exchange      139GD

Associate                    139GE

Cessation time - rights      139CB

Cessation time - shares      139CA

Discount                     139CC

Employee                     139GA

Employee share scheme        139C

Employer                     139GA

Exemption conditions         139CE

Financial assistance         139GG

Holding company              139GC
Market value of a
share or right               Subdivision F

Non-discriminatory schemes   139GF

Permanent employee           139GB

Providing a share or right   139G

Published price              139FH

Qualified person             139FG
Qualifying shares and
qualifying rights            139CD

Division 2-Other amendments of the Income Tax Assessment Act 1936 2.
Subsection 26AAC(4): Omit "This section" and substitute "Subject to subsection
(4AA), this section". 3. After subsection 26AAC(4): Insert:

"(4AA) This section does not apply to an acquisition by a taxpayer of a share
in a company, or of a right to acquire a share in a company, if:

   (a)  an amount is, or apart from section 139BA would be, included in the
        assessable income of the taxpayer under Division 13A in relation to
        the acquisition; or

   (b)  in the case of a share-the share was acquired as a result of the
        exercise of a right and this section did not apply in relation to the
        acquisition of the right.". 4. Subsection 27A(1) (definition of
        eligible termination payment): Add at the end:

"; or (q) amounts included in the assessable income of the taxpayer under
Division 13A;". 5. Section 160AZA (Main Index entry relating to Employee's
shares): Omit "160ZYJA", substitute "160ZYJE". 6. Division 9 of Part IIIA
(heading): Add at the end: "- section 26AAC". 7. After Division 9 of Part
IIIA: Insert:

"Division 9A-Employees' shares-Division 13A of Part III Shares or rights under
employee share scheme

"160ZYJB.(1) This section applies if an amount is, or apart from section 139BA
would be, included in a taxpayer's assessable income under Division 13A of
Part III as a result of the taxpayer acquiring a share or right.

"(2) If subsection 139CC(2) applies, the taxpayer is taken for the purposes of
this Part to have paid, at the time when the share or right is acquired by the
taxpayer, as consideration in respect of the acquisition, the greater of:

   (a)  the amount paid by the taxpayer as consideration in respect of the
        acquisition; and

   (b)  the market value of the share or right at the time of the acquisition.
        Note: Market Value is defined in Subdivision F of Division 13A of Part
        III.

"(3) If subsection 139CC(3) applies, this Part does not apply in respect of
the disposal mentioned in that subsection.

"(4) If subsection 139CC(4) applies, the taxpayer is taken for the purposes of
this Part to have paid, at the cessation time, an amount equal to the market
value of the share or right at that time as consideration in respect of the
acquisition. Note: Cessation time is defined in sections 139CA and 139CB.
Shares or rights under employee share scheme-associates

"160ZYJC.(1) This section applies if an amount is included in a taxpayer's
assessable income under Division 13A of Part III as a result of an associate
of the taxpayer acquiring a share or right. Note: Associate is defined in
section 139GE.

"(2) The associate is taken for the purposes of this Part to have paid, at the
time when the share or right is acquired by the associate, as consideration in
respect of the acquisition, the greater of:

   (a)  the amount paid by the associate as consideration in respect of the
        acquisition; and

   (b)  the market value of the share or right at the time of the acquisition.
        Employee share trusts

"160ZYJD.(1) For the purposes of this Part, if:

   (a)  an amount is, or apart from section 139BA would be, included in a
        taxpayer's assessable income under Division 13A of Part III as a
        result of the acquisition by the taxpayer of a share or right in a
        company; and

   (b)  the share or right was acquired by the taxpayer under the terms of a
        trust deed under which the trustee is required or authorised to sell,
        or otherwise to transfer, the share, or right, to:

   (i)  an employee of the company or of another company;

   (ii) an associate of such an employee; and

   (c)  either no amount was paid by the taxpayer as consideration for the
        share or, if an amount was paid, that amount is equal to or less than
        the indexed cost base to the trustee of the share or right; this Part
        does not apply in respect of the disposal by the trustee of the share
        or right to the taxpayer. Note: Employee is defined in section 139GA.

"(2) If the trust disposed of the share or right within 12 months after the
share or right was acquired by the trust, the reference in paragraph (1)(c) to
the indexed cost base to the trustee is to be read as a reference to the cost
base to the trustee. Terms have same meaning as in Division 13A of Part III

"160ZYJE. Despite section 160E, associate, cessation time, employee and market
value have the same meaning in this Division as in Division 13A of Part III.".
8. After section 530: Insert in Division 16 of Part XI: Reduction of foreign
investment fund income because of employee share scheme shares or rights

"530A.(1) If:

   (a)  a taxpayer acquired a qualifying share or right under an employee
        share scheme and has not made an election under section 139E for the
        year of income in which the share or right is acquired; and

   (b)  there is a period (the reduction period) forming the whole or part of
        a notional accounting period of a FIF in respect of which the
        following conditions are satisfied:

   (i)  the taxpayer holds the share or right;

   (ii) the share or right is an interest in the FIF;

   (iii) the cessation time for the share or right has not occurred; the
        foreign investment fund income of the taxpayer for the notional
        accounting period is to be reduced by an amount equal to any increase
        in the market value of the share or right during the reduction period.

"(2) In the section, cessation time, market value, qualifying right and
qualifying share have the same meanings as in Division 13A of Part III.".
PART 2-FRINGE BENEFITS TAX ASSESSMENT ACT 1986 9. Subsection 136(1)
(definition of fringe benefit): After paragraph (h), insert:

"(ha) a benefit constituted by the acquisition by a person of a share or right
under an employee share scheme (within the meaning of Division 13A of Part III
of the Income Tax Assessment Act 1936);

   (hb) a benefit constituted by the acquisition by a trust of money or other
        property where the sole activities of the trust are obtaining shares,
        or rights to acquire shares, in a company (the employer), or a holding
        company (within the meaning of the Corporations Law) of the employer,
        and providing those shares or rights to employees of the employer;".
PART 3-SUPERANNUATION ENTITIES (TAXATION) ACT 1987 10. After section 20:
Insert: Transitional-altered definition of eligible termination payment

"21. Part IIIA, including that Part as applying because of section  69 of the
Taxation Laws Amendment (Superannuation) Act 1992, applies in relation to
payments received after 24 December 1991 as if the definition of eligible
termination payment in section 27A of the Tax Act did not cover amounts that,
disregarding that definition, would be included in a taxpayer's assessable
income under section 26AAC or Division 13A of Part III of the Tax Act.".
PART 4-APPLICATION AND TRANSITIONAL 11. Application of amendments (1) Subject
to this section, the amendments made by this Schedule apply to the acquisition
of a share, or right to acquire a share, if it occurs after 6 p.m. by legal
time in the Australian Capital Territory on 28 March 1995.

(2) The amendments made by this Schedule do not apply to the acquisition of a
share where the share was acquired as a result of the exercise of a right
that:

   (a)  was acquired at or before 6 p.m. by legal time in the Australian
        Capital Territory on 28 March 1995; or

   (b)  is covered by subitem (3), (4) or (5).

(3) Subject to item 12, the amendments made by this Schedule do not apply to
the acquisition of a share or right before 1 July 1995 where:

   (a)  the share or right was acquired as a result of an offer, or an
        invitation, made at or before 6 p.m. by legal time in the Australian
        Capital Territory on 28 March 1995; and

   (b)  the offer or invitation was made to employees of a company to acquire
        shares, or rights to acquire shares, in the company or in a holding
        company of the company.

(4) Subject to item 12, the amendments made by this Schedule do not apply to
the acquisition of a share or right before 1 July 1996 where:

   (a)  the offer or invitation is to acquire shares, or rights to acquire
        shares, in a public company; and

   (b)  the share or right is acquired as a result of an offer, or an
        invitation, to employees of the public company or a subsidiary of the
        public company; and

   (c)  if the approval of shareholders is required for the scheme under which
        the offer or invitation was made-the scheme was approved by
        shareholders of the public company before 6 p.m. by legal time in the
        Australian Capital Territory on 28 March 1995.

(5) A taxpayer may make an election that the amendments made by this Schedule
do not apply to the acquisition of particular shares or rights where:

   (a)  the total market value, when acquired, of the shares or rights covered
        by the election, does not exceed $1000; and

   (b)  the shares or rights were acquired before 1 July 1995 as a result of
        an offer, or an invitation, made at or before 6 p.m. by legal time in
        the Australian Capital Territory on 28 March 1995.

(6) For the purposes of subitem (5), the market value of a right is taken to
be the same as the market value of the share to which it relates.

(7) In this item: public company means:

   (a)  a public company within the meaning of the Corporations Law; or

   (b)  a company established by Commonwealth, State or Territory legislation;
        or

   (c)  a company listed on an approved stock exchange.
Note:     Approved stock exchange is defined in section 139GD of the
Income Tax Assessment Act 1936. subsidiary has the same meaning as in the
Corporations Law. 12. Taxpayer may elect that amendments apply The amendments
made by this Schedule apply to the acquisition of a share or right by a
taxpayer if:

   (a)  apart from subitem 11(3) or 11(4), the amendments would apply to the
        acquisition; and

   (b)  the taxpayer elects that the amendments apply to the acquisition. 13.
        Application of amendments-election that amendments apply A taxpayer
        may make an election that the amendments made by this Schedule apply
        to the acquisition of a share, or a right to acquire a share, if the
        acquisition occurs after 7.30 p.m. by legal time in the Australian
        Capital Territory on 10 May 1994 and at or before 6 p.m. by legal time
        in the Australian Capital Territory on 28 March 1995. 14. Elections An
        election under this Part must be in writing in a form approved by the
        Commissioner and be made before the later of:

   (a)  the end of 90 days after the commencement of this item; and

   (b)  the time when the taxpayer lodges his or her return for the 1994-95
        year of income; or within such further time as the Commissioner
        allows. 15. Transitional-subsection 139CD(5) For the purposes of
        subsection 139CD(5) of the Income Tax Assessment  Act 1936 , a share
        or right is taken to be acquired under an employee share scheme if it
        would have been so acquired if item 11 of this Schedule provided that
        the amendments made by this Schedule applied to shares or rights
        acquired at any time before or after the commencement of this item.