On 14 January 2015, the government released an Exposure Draft Bill on its promised changes to the Employee Share Schemes (ESS) rules. KPMG has prepared a brief to keep you updated on these changes that will help realign the Australian tax treatment of ESS, in particular share options, with international best practice.
From 1 July 2015 share options will once again become taxable at exercise rather than being taxable at the time of vest as at present. This reversal of the controversial 2009 changes will give companies the opportunity to consider whether share options are appropriate in their particular circumstances.
Other changes that will positively impact all companies include:
The Exposure Draft sets out the rules for concessions for startups and effectively allow for:
The definition of a startup is limited and, of note, excludes any listed company.
While these changes are most welcome, we would like to see the removal of the automatic taxing point that arises on cessation of employment, and an extension of the startup concession to certain listed companies.