Page 95 - Suncorp_Review

Suncorp Group Limited Annual Report 2010/11 93

11.4 Tax consolidation

Since the Company became the ultimate parent entity for the Suncorp Group on 7 January 2011, the Company is the head company of a tax consolidated group comprising of all Australian wholly owned entities within the Suncorp Group. Prior to this date, Suncorp-Metway Ltd was the head company of the tax consolidated group in Australia. In the opinion of the directors, this limits the joint and several liability of the wholly owned subsidiaries in the case of default by the head company of the tax consolidated group. Under the tax-sharing agreement, the wholly owned entities fully compensate the Company for any current tax payable assumed.

11.5 The Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009 (TOFA legislation)

Compliance with the TOFA legislation is mandatory for the tax consolidated group for tax years beginning on or after 1 July 2010. The Suncorp Group has accepted the default method of accruals or realisation and has not made any elections regarding transitional fnancial arrangements or other elective timing methods. As a result, there have been no material impacts on the Suncorp Group’s fnancial statements upon adoption of the TOFA legislation.

12. Share-based payments

The Suncorp Group operates a number of employee share plans. Shares required for the share plans are acquired by a special purpose trustee and/or custodial companies in ordinary trading on the Australian Securities Exchange. Features of the plans currently in operation are set out below:

SHARE PLANS

EXECUTIVE PERFORMANCE SHARE PLAN (EPSP)

EXEMPT EMPLOYEE SHARE PLAN (EESP)

DEFERRED EMPLOYEE SHARE PLAN (DESP)

NON-EXECUTIVE DIRECTORS SHARE PLAN (NEDSP)

Method of settlement

Equity-settled. Cash-settled in limited circumstances as elected by the Board

Equity-settled Equity-settled Equity-settled

Eligible plan participant

Executives Employees not part of

the EPSP

Employees can elect to participate

Non-executive directors or their associates as approved by the Board can elect to participate.

Basis of share grant/issue

Value of shares granted (offered) is determined by the Board based on the executive’s level of remuneration and individual performance.

Market value of shares up to $1,000 per employee per year may be granted by the Board based on the Suncorp Group’s overall performance.

Employees to fund the acquisition of shares to be held under this Plan from their pre-tax remuneration up to a maximum value of $5,000

Non-executive directors nominate a percentage of their pre-tax remuneration up to a maximum of $5,000 per annum to fund the acquisition of shares on market.

Shares acquired are held in the Plan for a maximum of seven years from the date of acquisition.

Vesting Subject to satisfaction of

performance criteria over the performance period

Fully vested, not subject to forfeiture

As the acquisition of shares is funded through the participating employee’s or non-executive director’s remuneration, the shares are fully vested at the date of acquisition.

Performance criteria

Refer to note 12.1.1 None None None

Minimum holding period

None after shares are vested Earlier of three years or upon

cessation of employment

Earlier of one year or upon cessation of employment

None

Plan maximum limit

Shares can only be granted or issued under the plans if the number to be granted or issued will not exceed 5% of total shares on issue for the Company when aggregated with the number of shares granted or issued during the previous fve years for all share plans operating by the Company.

Dividend entitlements

Vested shares carry full entitlement to dividend from the grant date (less any taxes paid by the Plan Trustee in respect of such dividends).

Full entitlement from when the shares are allocated to the participating employee in the Plan.

Full entitlement to dividend from when the shares are acquired and held in the Plan.

Voting rights Voting rights are held

by the Plan Trustee until shares are vested.

Participating employees have the right to vote from when the shares are allocated to them in the Plan.

Participating employees and non-executive directors have the right to vote from when the shares are acquired and held in the Plan.