Fox and Commissioner of Taxation (Taxation)

This matter concerned an appeal by the Applicant, an former executive assistant to the CEO of NewSat, against a decision of the Commissioner of Taxation regarding the tax treatment of Performance Rights granted to her under an employee share scheme. The Applicant had received 700,000 Performance Rights, convertible into ordinary shares, at no cost. The dispute arose from the Commissioner's inclusion of a discount related to these rights in the Applicant's assessable income for the 2014 financial year, which the Applicant contended was incorrect due to circumstances surrounding the grant of the rights. The case was heard by R Pintos-Lopez SM.

The primary legal issues before the Tribunal were whether it had the power to determine the Applicant's case, given her submissions that she was not afforded adequate opportunity to obtain independent advice and was coerced into signing the offer for the Performance Rights, thereby affecting the validity of the grant. The Applicant argued that if the grant was invalid, the discount should not have been added to her assessable income. The Tribunal was also required to consider whether the objection decision ought to be set aside.

The Tribunal considered the provisions of Division 83A of the *Income Tax Assessment Act 1997* (ITAA 1997), which governs employee share schemes. It noted that where an employee receives ESS interests for no payment or less than market value, the difference constitutes a "discount" which is generally subject to income tax. The Tribunal also examined Section 14ZZK of the *Taxation Administration Act 1953* (TAA), which outlines the applicant's burden of proof in reviews of objection decisions. The Applicant's submissions focused on her alleged lack of legal capacity, insufficient time to seek advice, and pressure to sign the offer, which she argued rendered the grant void or voidable.

The decision affirmed the Commissioner's assessment. The Tribunal found that the Applicant had not established that she lacked the legal capacity to enter into the agreement or that she was coerced into signing the offer. Consequently, the Performance Rights were validly granted, and the discount was correctly included in her assessable income for the 2014 income year.