11 March 1996 - 3 December 2007
Calculation of Market Value for Employee Share Schemes
The Treasurer today announced an amendment to the income tax law dealing with the calculation of the market value of shares, or unlisted rights to acquire shares, acquired under certain employee share schemes.
The Government will amend the employee share scheme provisions in Division 13A of the Income Tax Assessment Act 1936. The amendment will apply where a public offer of shares is made in an existing listed public company and an offer of shares or unlisted rights to acquire shares under an employee share scheme is made in conjunction with that public offer. The amendment will ensure that the market value of shares on acquisition will be the public offer price. As a result, the existing law will automatically use the public offer price in working out the value of any unlisted rights on acquisition.
The amendment will overcome an anomaly in the existing law that produces unintended consequences where employee share schemes are offered in conjunction with a public offer of shares in an existing listed public company. The change to the law recognises that the public offer price of shares is the more appropriate value to use and reflects the Governments commitment to encouraging employees to participate in the ownership of enterprises in which they work.
The change to the law will apply to acquisitions from today.
Legislation giving effect to this amendment will be introduced as soon as possible.
2 September 1999
Contact Officer: Mr Gavin Back, Australian Taxation Office