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!