This report urges employers to take steps to meet their first compliance deadline of 15 July 2017 in Australia for reporting Employee Share Schemes.
The first deadline for Australian Employee Share Scheme (ESS) tax reporting is 15 July 2017.1 All taxable events arising under the ESS during the year ended 30 June 2017 need to be reported.
This is an employer reporting obligation and so companies must comply. They should have appropriate systems and procedures in place to meet their ESS-related compliance obligations.
Penalties can be assessed for late lodgment.
The Australian Taxation Office (ATO) is committed to providing better online services to taxpayers, and in doing so, has been significantly shifting the onus of responsibility for tax reporting from employees to employers.
All taxable events arising under the ESS during the year ended 30 June 2017 need to be reported.
The timing of the taxable event and the type of information to be reported are driven by the type of ESS, and the date on which awards were granted under the ESS.
Generally, the following reporting obligations will exist:
|ESS Statements from Employers to Employees||ESS Annual Report from Employers to ATO|
|Reporting deadline||15 July 2017||15 August 2017|
|Information to be reported
||Estimate of assessable income*||
Estimate of assessable income*
Number of awards that become taxable
Date of taxable event(s)
* Where an employee relocates internationally between grant and vest, some of the income arising under the ESS may be exempt from Australian tax and does not need to be reported.
Note that cash-settled plans are not included in this reporting obligation, and should be reported as part of a company’s regular PAYG withholding obligations.
The introduction of multiple legislative changes since 2009 require careful application to each employer’s ESS to help ensure that Australian tax reporting to ESS participants and the ATO is complete and accurate.
In some situations, employers may wish to seek advice and assistance from their qualified tax and/or global compensation professionals.
The obligation to report rests with the provider of the ESS.
Where employees of Australian subsidiaries participate in a foreign parent ESS, the Australian subsidiary typically takes responsibility for the reporting obligations.
Last year, the ATO changed the way ESS information is to be reported. The only lodgment channels available from FY16 onwards are:
This is now the second year of online lodgment in Australia and paper forms can no longer be used. There are no substantive changes from last year’s returns.
1 For related information, see “ESS – Reporting requirements for employers” on the ATO website.
For additional information or assistance, please contact your local GMS or People Services professional or one of the following professionals with the KPMG International member firm in Australia:
Tel. + 61 (0)416 017 131
Tel. +61 (0)417 541 861
To find out how KPMG can assist, visit: http://kpmg.com/au/essreporter.
The information contained in this newsletter was submitted by the KPMG International member firm in Australia.
© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.