| Revenue Ruling Public Ruling
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| Following feedback received from a number of employers and in particular those operating in both Tasmania and in other jurisdictions, the Commissioner of State Revenue has decided to withdraw this Revenue Ruling PUB-PT-2005-2 Employee Share Schemes (the Ruling). The feedback received from employers related to issues of interjurisdictional consistency and the ease of compliance for national employers with respect to the liability and valuation dates prescribed in the Ruling. In this regard it is recognised that the determination of these dates under the Ruling resulted in the adoption of different dates than those that would be applied in jurisdictions that currently impose payroll tax in relation to employee share schemes. Therefore, contributions made to employee share schemes in respect of employees, directors or members of governing bodies are not currently subject to payroll tax in Tasmania unless they form part of a salary sacrifice arrangement. Preamble The availability of employee share schemes has become an increasingly popular and common means of rewarding employees, directors and members of governing bodies of companies. In the past, my opinion was that the definition of “wages” in Section 2 of the Tasmanian Pay-roll Tax Act 1971 (the Pay-roll Tax Act) did not extend to capture the benefits provided under these types of schemes. However, the Solicitor-General has recently advised me that these benefits are captured under the existing definition of wages. Note This ruling does not apply to salary sacrifice arrangements entered into by an employee with their employer. That is, amounts salary sacrificed by employees from their pre-tax salary continue to be subject to payroll tax at the time that the employee decides to sacrifice salary and directs their employer to deal with their remuneration package on that basis. Accordingly, amounts salary sacrificed to access benefits under an employee share scheme are taxable for payroll tax purposes on the same basis as currently occurs with other salary sacrifice arrangements rather than in accordance with this ruling. Ruling General This ruling has been released to advise employers and their representatives of a change in the payroll tax treatment of benefits provided to employees, directors and members of governing bodies under an “employee share scheme”. Effective Date Because employers will need to consider the potential system changes required to be made to accommodate these changes, this ruling has an effective date of 1 July 2005. Definitions For the purposes of this ruling: (a) an “employee share scheme” is a scheme by which an employer provides shares, rights to acquire shares, units in a unit trust scheme or rights to acquire units in a unit trust scheme, whether directly or indirectly, to or in relation to an employee, director or member of a governing body of a company for services performed or rendered by the employee, director or member; (b) a “unit trust scheme” means any arrangements whereby persons having funds available for investment, are able to participate as trust beneficiaries, in any profits, income or distribution of assets arising from the acquisition, holding, management or disposal of any property whatever pursuant to the trust; (c) a “right” to acquire a share or unit includes any right, or option, whether actual, prospective or contingent, of a person to have a share or unit issued or transferred to the person; (d) a “unit” in a unit trust scheme means a right or interest (whether described as a unit or a sub-unit or otherwise) of a beneficiary under the scheme. The value of the benefits provided to employees under employee share schemes are considered to be liable for payroll tax either as “wages” or “bonuses” under Section 2(1) of the Pay-roll Tax Act. Contributions made to employee share schemes for the benefit of directors or members of the governing body of a company are subject to payroll tax where those contributions represent remuneration paid to that director or member. Liability Date Benefits provided to employees, directors or members of governing bodies under employee share schemes are considered to be liable to payroll tax when the shares vest in the employee, director or member of the governing body (that is, when the shares or units are transferred into the name of the employee, director or member in the company’s share register or unit trust register as the case may be). Liability for payroll tax for a right is triggered when the right is transferred to the employee, director or member of a governing body (that is, when the right is transferred into the name of the employee, director or member in the company's Register of Option Holders). The respective values of the shares, units and rights are to be determined as at the liability date in accordance with clauses 1. and 2. below. Valuation Methodology
Private Ruling Requests It is recognised that there are many different employee share schemes currently available to employees. Therefore, employers uncertain as to the potential impact this ruling may have on their payroll tax liability should set out the relevant details and seek a written private ruling. All rulings must be read subject to Revenue Ruling PUB-GEN-2001-1. Peter Coe COMMISSIONER OF STATE REVENUE | ||||||||||||||||||||||
