Employee share schemes: Supporting new businesses, innovation and start-ups

THE House of Representatives Standing Committee on Tax and Revenue has today presented its report titled Owning a Share of Your Work: Tax Treatment of Employee Share Schemes.

Employee share schemes are a means by which an employer can offer an employee shares or options in relation to their employment. In its report, the committee makes 18 recommendations to support the uptake and use of employee share schemes in Australia.

The committee’s overarching recommendation is that employee share schemes be treated as capital for the purposes of taxation, and that a tax liability would arise on the disposal of the assets granted, using the current capital gains tax regime.

The committee’s recommendations also include regulatory relief to reduce disclosure requirements in certain situations, enhanced collection and sharing of data relating to employee share schemes, a public awareness program, and an investigation by the Productivity Commission to identify how Australia’s existing arrangements in this space can be improved.

The Committee’s recommendations also include proposed amendments to the Tax and Superannuation Laws Amendment Employee Share Schemes) Act 2015 and the Income Tax Assessment Act 1997, to simplify the complicated and restrictive current tax arrangements for employee share schemes, and support more individuals to access tax concessions for employee share schemes.

Committee chair, Jason Falinski MP, advocated for policy changes in this space.

"Employee share schemes matter because they support new businesses, innovation and start-ups, which are the engine of higher productivity in our country," Mr Falinski said.

"Higher productivity leads to sustainably higher wages, better products and services, greater competition and more choice. All these outcomes directly impact on the quality of life that hard working Australians enjoy. Productivity is what makes life better, more affordable and easier."

A full copy of the committee’s report can be found on the inquiry’s website: https://www.aph.gov.au/Parliamentary_Business/Committees/House/Tax_and_Revenue/EmployeeShareSchemes

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