Good news for Employee Share Schemes, improved legislation
On Wednesday 25 March 2015 the Minister for Small Business, the
Hon. Bruce Billson MP, introduced into Parliament the Tax and
Superannuation Laws Amendment (Employee Share Schemes) Bill
The legislation broadly follows the original Exposure Draft that
was released in January this year, however we are very pleased to
note there is one key enhancement for Start-up companies that was
the primary substance to Moore Stephens' Treasury Submission in
February this year. Click
here to read the full submission.
As previously reported, the original Exposure Draft introduced a
number of enhancements to the taxation of Employee Share Plans,
The ability for all companies to have the deferred taxing point
on Share Options extended from the date of "vesting" to
the date of "exercise";
An extension of the maximum deferral period from 7 years to 15
The introduction of start-up concessions whereby, subject to
specific requirements, Share and Option Plans could be carved out
of the Employee Share Scheme provisions; and
Including improvements to the overlay of the Division 7A loan
rules to open up more opportunity for the provision of company loan
funded equity arrangements.
However, in our view, the Exposure Draft contained a major flaw.
Companies that qualified as "Start-up" companies that
placed performance conditions on a Share Option Scheme found
themselves disqualified from being able to access the new
concessions. Given that most Employee Share Plans have some form of
performance condition, it meant that the concessions would have
limited application in practice, and we viewed this as a
Under the legislation presented into Parliament yesterday, the
application of performance conditions to a Share Option Scheme that
otherwise satisfies the Start-up concessions, is no longer
precluded from applying the concessions. We applaud this amendment
and see it having a big impact on the level of participation in
Employee Share Plans by Start-up companies.
It is our expectation that the Bills will be passed as drafted,
and this announcement therefore provides a much clearer outlook for
companies considering an Employee Share Plan. If this is you, we
would encourage you to contact the author or your local Moore
The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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