Start-up companies and companies aiming to retain skilled employees can breathe a sigh of relief as the federal government intends to modify and lower the tax obligation on the present employee share scheme tax regulations. This move calls for the expertise of a tax advisor.
Under the current tax law introduced on 1 July 2009, employees can be taxed upfront on acquiring the share options from their company. Before this date, employees could defer the tax on shares or options for up to 10 years when 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 wants to relax the current employee share scheme rules and make it more attractive for companies. The government will release 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.
*Correct as of August 2014
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