Concessional tax treatment of employee share schemes
Posted on August 02, 2014
It was reported in the Australian Financial Review (AFR) on 1 August 2014 that the Abbott government will revoke the Rudd government’s controversial 2009 employee share scheme changes, which restricted tax concessions to employees earning up to $180,000. This resulted in the collapse of many employee share schemes very quickly.
The AFR also reported that Labor leader Bill Shorten agrees these changes created a “drag on innovation” and indicated Labor would support a relaxation of the tax rules. The reference to innovation reflects the need to use employee share schemes to reward executives of innovative start-up businesses who cannot afford to pay full salaries.
It is thought that the changes to the rules could provide a stimulus to the economy.
It should also be noted that under the present rules, the tax concessions that are available apply only if a range of conditions are met. If outside those conditions, shares received by an employee or his or her associates in connection with their employment are generally taxable on their value in the year of receipt.
If you would like any advice or assistance in relation to employee share schemes or dividend access shares please contact Joe Subic.
