Newsletter
March 2015 Newsletter
Employee share scheme tax law changes on the way
The Government says it will improve the taxation arrangements for employee share schemes. According to the Minister of Small Business, Bruce Billson, the proposed changes to the tax law are designed to increase the international competitiveness of the country’s tax system and allow innovative Australian firms to attract and retain high-quality employees.
A key change proposed is to reverse some of the changes made in 2009 to the point at which rights issued as part of an employee share scheme are taxed for employees of all corporate tax entities. Another key change is to provide employees of certain small start-up companies with further concessions when acquiring certain shares or rights in their employer. These further concessions would be an income tax exemption for the discount received on certain shares and the deferral of the income tax on the discount received on certain rights, which are instead tax under the capital gains tax (CGT) rules.
The ATO has also commenced consultations with stakeholders on how to streamline the process of establishing and maintaining an employee share scheme.
TIP: The tax law amendments are proposed to commence on 1 July 2015. This could mean swift passing of legislative amendments through Parliament. Companies should keep a watch on the progress of the legislation.