Alert

Who does this affect?

Any companies or employees that offer or participate in employee share schemes, or are considering doing so

What do you need to do?

Consider the timing of currently contemplated offers, and whether to participate in the consultation process regarding the Exposure Draft for the proposed changes

Author
Kai-Chen Chang  
Solicitor

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Andrew Clements  
Partner
T +61 3 9643 4089

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The Assistant Treasurer released today a press release outlining the process the Government intends to follow in legislating and implementing the proposed amendments to the taxation of employee share schemes.

A summary of the substance of the Government’s proposed amendments are available here.

The press release

Broadly, the Assistant Treasurer announced that:

• An Exposure Draft of the bill to implement the proposed changes will be released in August

• There will be a two week consultation period on the Exposure Draft following its release

• The Board of Taxation will participate in industry consultations on the Exposure Draft, to report to Treasury within one month of the Exposure Draft being released, and

• The bill to implement the proposed amendments will be introduced in the Spring Sittings of Parliament.

The Assistant Treasurer also provided the terms of reference for the Board of Taxation’s review of the two issues that had been referred to the Board of Taxation for their detailed consideration in the Policy Statement released on 1 July 2009. These are:

• The rules for the determination of the market value of shares or rights provided under employee share schemes, and

• Whether special deferral arrangements should apply to shares or rights provided by start-up, research and development and speculative-type companies, and not unlisted companies more generally.

The press release did not contain any information regarding the substantive content of the proposed changes.

Review of employee share schemes by Economics Reference Committee

The Senate Economics References Committee is currently undertaking a review of the operation of employee share schemes in Australia.

The issues that the Senate Economics References Committee has been asked to consider include not only the taxation treatment of employee share schemes in Australia, but also the structure, operation and benefits of employee share schemes in Australia, and the rules relating to employee share schemes in other jurisdictions.

Mallesons has made a submission to the Senate Economics References Committee, a copy of which is available here.

The Economics References Committee is not due to report until 17 August 2009. The proposed amendments to the rules relating to the taxation of employee share scheme rules discussed above do not depend on the review of employee share schemes by the Economics References Committee.