Employee Share Schemes – changes are coming

Current as of August 2014

The federal government is planning to change and reduce the tax burden on the current employee share scheme tax laws. This will be a big relief for start-up companies and companies seeking to attract and retain talented employees.

Under the current tax law introduced from 1 July 2009, employees can be taxed upfront on acquiring the share options from their company. Prior to this date, employees were able to defer the tax on shares or options for up to 10 years where certain conditions were met. The proposed changes could see shares taxed when the shares are sold. Small Business Minister Bruce Billson recently commented that the government is looking to relax the current employee share scheme rules and make it more attractive for companies. The government will be releasing details of the new tax rules in the “National Industry Investment and Competitiveness Agenda”.

We will continue to monitor the development in this area and update you as soon as we have more information from the government.

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