ATO draft tax ruling on use of employee remuneration trusts not likely to impact employee share schemes
09/03/2014
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Concerns have been raised that employer contributions to employee share trust may not be tax deductible after a recent tax ruling.

Do not panic.

The concerns that draft tax ruling ATO TR 2014/D1, issued by the Australian Taxation Office on 5 March 2014, may affect employers using a trust structure in their employee share schemes may be unwarranted.

The draft Ruling explains the taxation consequences for employers, trustees and employees who participate in an employee remuneration trust arrangement (ERT). In particular, it explains how the taxation laws apply when a contribution is made by an employer to the trustee of an ERT and benefits are paid or provided by the trustee of the ERT to employees.

However, paragraph 5 of the draft ruling states: ‘This draft Ruling does not deal with circumstances in which a contribution to, or benefits received from, an ERT may be statutory income under (or as a result of)…Division 83A of the Income Tax Assessment Act 1997 and former Division 13A of Part III of the Income Tax Assessment Act 1936 (employee share schemes)…’

The draft ruling is available HERE.

Comments can be made on the draft ruling until 18 April 2014.

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