Change to the Taxation of Employee Share Schemes

Earlier this week the federal government released the draft legislation “Improvements to the Taxation of Employee Share Schemes” and accompanying exposure draft, which was announced in October last year.

Importantly, the government is clearly a big supporter of ESOP’s – the Explanatory materials include in the Context section – “The changes are designed to make Australia’s taxation of ESOP’s more competitive by international standards and to facilitate the commercialisation of innovative ideas in Australia, The changes will assists innovative Australian forms to attract and retain high quality employees…and will make it easier and cheaper for businesses to set up and maintain an ESOP. International research suggests that companies in which employees have an ownership interest are more productive”

The law will cover Australian early-stage startups – companies with less than $50 million turnover, existing for less than 10 years.

The ATO is now inviting interested parties to comment on the draft legislation. The closing date for written submissions is February 6. As always the devil is in the detail but this is a big step in the right direction!

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.