THE DEFERRED EMPLOYEE SHARE TRUST

The concept involves the establishment of a special purpose Deferred Employee Share Trust (DEST). The DEST receives (deductible) contributions from the Employer and purchases shares as fresh issues from the Employer or from other shareholders (e.g. from the ASX).

Under the qualifying tax deferred provision of Division 13A of the Income Tax Assessment Act 1936, investments offered must be shares in the Employer or a holding company. The share offers may be to selected Employees on differing terms, and must be subject to restrictions on sale or forfeiture. No tax limitation on size of allocations (i.e. subject to 5% issued share limit on individual allocations). There is no need to offer the shares to at least 75% of Employees, if general offers to at least 75% of Employees are made under the Employee Exempt Share Trust. And shares are tax deferred until the earlier of ten years, termination of employment, sale of shares or distribution of shares.

EMPLOYER TYPE

• Public Companies.

STRATEGY

• Retention Strategy.
• Wealth Creation.

ADVANTAGES

• The plan is flexible and enabling – that is, it suits a wide range of strategic remuneration applications.
• Investment choice is limited to ordinary shares of the Employer or a holding company.
• Vesting and/or performance hurdles, if applicable, are controlled by Terms of Issue of the shares as instructed by the Employer.
• Funding by the Employer is made by way of tax deductible Employer contributions.
• Tax deferred to Participating Employees until the earlier of ten years, termination or employment, sale of shares or distribution of shares.
• As no gearing is required, the plan provides a controlled downside risk protection for Employees.
• Deferred provisions only apply to Employees (i.e. not contractors).
• Only applies to Participating Employees owning less then 5% of the issues shares.
• Fully outsourced administration.