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NATIONAL AUSTRALIA BANK STAFF SHARE SCHEME
ALLOCATION AND OWNERSHIP PLAN SHARES
1997, 1998 AND 1999 OFFERS
In summary, a change in the interpretation of the taxation laws has been confirmed by the ATO where employee shares were acquired and held by a Trust on behalf of an employee and the employee made an election to be assessed upfront (ie. in the year the shares were acquired by the Trustee) on the discount in respect of those shares.
If you made an election to be taxed upfront in relation to any of your 1997, 1998 or 1999 Staff Shares ("25 Shares at No Cost to You" and "Loan Shares"), the National has obtained a Class Ruling from the Australian Taxation Office which gives the result that part of the increase in the value of the shares acquired in the year(s) that you made the election will be not be assessable to you.
Does this apply to everyone who participated in the 1997, 1998 or 1999 share offers?
No - The Class Ruling is only relevant if you made an election to be assessed upfront on your 1997, 1998 or 1999 Staff Shares.
What is an election?
If you made an election to be taxed upfront on your 1997, 1998 or 1999 Staff Shares then you would have included 1 cent per share in your assessable income for the relevant year for the Loan Shares. If you made an election you would also have taken advantage of the $1,000 tax exemption and not included any amount in your tax return for the "25 Shares at No Cost to You".
How do I know if I made an election?
A standard (green) election form was sent to you around 30 June 1998 (for the 1997 shares) 30 June 1999 (for the 1998 shares) and 30 June 2000 (for the 1999 shares). If you chose to make the election, it was required to be completed before you lodged your income tax return for the relevant year and should have been retained with your income tax return details. So check your income tax return details for each year or check with your accountant/tax agent to see if you made an election for the years ended:
- 30 June 1998 (for the 1997 shares)
- 30 June 1999 (for the 1998 shares)
- 30 June 2000 (for the 1999 shares) A separate election was required for each year.
Option holders
If you made an election it applied to all shares and options acquired during the relevant year under any National employee share scheme, which includes an option plan. Therefore, if you made an election in respect of your 1997, 1998 or 1999 Staff Shares and you also participated in the National's Executive Share Option Plan in the same financial year, you would also have included the market value of the options in your assessable income for that year. If you did not include the market value of your options in your assessable income then this would indicate that you did not make an election for the relevant year. If you did make the election to be taxed upfront, these tax changes only apply to your "25 Shares at No Cost to You" and your Loan Shares. The tax change does not impact or apply to any options or shares acquired under the National's Executive Share Option Plan.
What do I need to do?
You don't have to do anything now if you still hold your shares. This is only relevant when you dispose of your Staff Shares at which time you will need to calculate if you have made a gain or loss on disposal for capital gains tax purposes. It is important that you keep this information so that when you do sell your shares, if relevant, you can take advantage of this tax free benefit. If you have already disposed of your shares, you may need to recalculate your gain or loss on disposal taking into account these changes. If you have already lodged your tax return for the year in which you sold your shares and made a gain on disposal you may have paid too much tax and, therefore, be entitled to a refund of tax. It is recommended that you discuss this further with your tax agent or the person who prepares your tax return.
What if I did not make the election?
If you did not make an election in respect of your 1997, 1998 or 1999 Staff Shares, the following tax changes will not impact your situation for the shares acquired in the particular year that you did not make the election. If you did not make an election in respect of your 1997, 1998 or 1999 Staff shares, you will not be able to make the election in respect of those shares now. The election was required to be completed prior to lodging your income tax return for the relevant year. The taxation implications for you on disposal of your shares will be the same as detailed in the Australian Tax Reference Guides previously distributed with each year's share offer details.
Does the class ruling apply to other staff share offers?
NO
The tax changes in the Class Ruling are only relevant to shares acquired under the 1997, 1998 or 1999 employee share offers and do not relate to the National EVA share offer recently made nor any share offers made by the National prior to 1997. The tax changes in the Class Ruling do not change the discount amount you would have included in your tax return, if you made the election, for the year in which the shares were purchased by the Trustee on your behalf.
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