Section DC 13 — Income Tax Act 2007: Criteria for approval of share purchase schemes: before period of restriction ends

DC 13 Criteria for approval of share purchase schemes: before period of restriction ends What this section does (1) This section sets out the criteria, relating to the provisions of a share purchase scheme on the period of restriction, that the Commissioner applies in determining whether or not to approve the scheme. Purchase of shares (2) The scheme must provide for— (a) the shares to be available for no more than their market value at the date of purchase or subscription; and (b) the amount that an employee spends on buying shares under the scheme or any similar scheme to be $2,340 or less in a 3 year period. Eligibility (3) The scheme must provide for— (a) employees to be eligible to participate equally in the scheme, that is,— (i) every full-time permanent employee on an equal basis with every other full-time permanent employee; and (ii) if the scheme applies to part-time employees and seasonal employees, every part-time employee on an equal basis with every other part-time employee and every seasonal employee on an equal basis with every other seasonal employee; and (b) any minimum period of employment or service before employees are eligible to participate,— (i) for full-time employees, to be no more than 3 years’ full-time work; and (ii) for other employees, an accumulated period that is the equivalent of 3 years’ full-time work. Loans to employees (4) The scheme must provide for— (a) a loan to an employee to buy shares to be free of interest and other charges; and (b) any minimum amount of loan to be $624 or less; and (c) employees to be able to repay the loan by regular equal instalments at intervals of 1 month or less over a period of between 3 years and 5 years from the date of the loan; and (d) employees to be able to choose to repay some or all of the loan before the due date for repayment. Shares held on trust (5) The scheme must provide for— (a) the trustee of the scheme to hold the shares in trust for the employee; and (b) the trustee to pay any dividends directly to the employee; and (c) the dividends to be treated as having been derived by the employee; and (d) the trustee to be prohibited from applying the amount of any dividend to the repayment of a sum owing to the company or to the trustee; and (e) the employee to be prohibited from charging or disposing of their rights or interests in the shares. Hardship (6) The scheme must provide for a trustee who is satisfied that the employee’s continued participation in the scheme has resulted or would result in serious hardship,— (a) with the employee’s agreement, to vary the terms of the repayment of a loan under the scheme; or (b) with the employee’s agreement, to allow the employee to withdraw from the scheme as if they had ended their employment in the circumstances described in section DC 14(4) . Withdrawal from scheme (7) The scheme must provide for— (a) an employee to be able to withdraw from the scheme on giving 3 months’ notice to the trustee; and (b) the employee to be treated for the purposes of the scheme as if they ended their employment with the company on the date the notice takes effect, with the effect that section DC 14(4) and (5) then apply. Defined in this Act: amount , Commissioner , company , dividend , employee , interest , notice , pay , period of restriction , share , share purchase scheme , trustee , year , Compare: 2004 No 35 s DC 12 Section DC 13(5)(d): substituted (with effect on 1 April 2008), on 6 October 2009, by section 83(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).