PPT Overview - Succession Plus

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PPT Overview

Private Binding Ruling Issued for Peak Performance Trust

As many of you know, we have been working for some time to finalise a Private Binding Ruling to provide absolute tax certainty for a NSW based client using our Peak Performance Trust. This has been a time consuming and sometimes frustrating process. This is the first ruling issued on this structure since the new ESS legislation was introduced in July 2016. The ruling was finalised and documents were received on December 15, 2017.

The Peak Performance Trust is an employee share trust as defined in subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA)  and subsection 130-85(4) and is a special unit trust whose operation is governed by a trust deed. Employees are granted units based on predetermined qualification rules and a profit share contribution (based on an agreed formula) is made to allow the trust to acquire shares in the employer company. The plan is an employee share scheme within the meaning of subsection 83A-10-(1) of the ITAA.

The tax ruling confirms that contributions to the PPT are tax deductible in accordance with section 8-1 of the ITAA, and that contributions paid do not constitute a fringe benefit.

We are now working with the ATO to determine the best way to provide certainty for other clients and hope to have this completed in the short term.