If your business operates an employee share or option plan, you
are subject to withholding and reporting obligations.
The offering of shares, stapled securities, options and rights
to acquire shares and stapled securities are now often referred to
as ESS interests. There is a withholding obligation if the employee
has not provided a TFN or ABN. Under the new reporting
requirements, employers are required to:
provide employees with an annual statement by 14 July 2010;
provide an annual report to the ATO by 14 August 2010,
for interests acquired after 1 July 2009 and to some interests
acquired before that date where the cessation date is after 30 June
The rules also apply to ESS interests acquired via a trust. The
ATO has recently released the relevant forms.
Annual Statement for Employees
By 14 July 2010, employers must give their employees an ESS
employees (or their associates) have acquired ESS interests
under a taxed up-front ESS at a discount during the financial year;
a deferred taxing point for ESS interests acquired under a
tax-deferred ESS (or a cessation time for shares and rights
acquired before 1 July 2009) has arisen or could have arisen in the
This statement helps employees complete their tax return. When
determining and reporting the discount at the deferred taxing
point, employers must take account of the 30-day rule if they know
that the ESS interests were disposed of by the employee within 30
days of the deferred taxing point.
Also, if there is any material change or omission in any
information given to employees, employers must supply the employee
with the corrected information within 30 days of becoming aware of
the change or omission.
The form for the annual statement can be downloaded from the ATO
Annual Report for the ATO
By 14 August 2010, employers must also provide the ATO with an
ESS annual report on the approved ESS annual report form. The form
can be downloaded from the ATO
The ESS annual report must include, but is not limited to, the
following information for each employee participating in an ESS and
for each ESS that the employee is participating in:
a plan identifier (a reference that makes a plan unique within
all plans offered by that employer);
a plan date (the date a taxing point happens to an ESS
TFN amounts withheld from discounts on ESS interests for which
a taxing point arose during the financial year.
There are specific requirements for taxed-upfront schemes and
tax deferred schemes.
If there is any material change or omission in any information
given to the ATO, employers must supply the ATO with the corrected
information within 30 days of becoming aware of the change or
We can help you with completion of the relevant forms and any
issues you may have regarding Employee Share and Option Plans.
DLA Phillips Fox is one of the largest legal firms in
Australasia and a member of DLA Piper Group, an alliance of
independent legal practices. It is a separate and distinct legal
entity. For more information visit
This publication is intended as a first point of reference and
should not be relied on as a substitute for professional advice.
Specialist legal advice should always be sought in relation to any
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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