NO.054

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

Government’s 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

Telephone: (02) 6216 1393