The Government proposes to modify the Budget measure as
introduce a limited deferral of the taxing point for schemes
where there is a 'genuine risk of forfeiture', to protect
employees who have a real risk of being taxed on a share or right
that they might never get full title to;
modify the taxing point ('deferred taxing point') for
shares, stapled securities and rights;
introduce an annual reporting requirement and associated
review the existing valuation rules;
modify the rules relating to the refund of income tax for
The Government proposes that these new arrangements will apply
to shares or rights acquired on or after 1 July 2009. The existing
law apply to all shares and rights acquired before 1 July.
Moore Stephens in its submission to Treasury proposed the ESS
provisions be revised as follows;
Removal of the existing section139E election provision;
Insertion of default taxation at grant on all schemes;
Insertion of an Election to defer tax on qualifying
Expansion of the existing PAYG Reporting System to include the
value of any discount provided to an employee under an ESS on the
PAYG Payment Summary in a similar manner to Reportable Fringe
Functionality in an individual's tax return to capture the
PAYG Payment Summary data and notate it as income in a similar
manner to allowances and certain lump sum payments;
Functionality within the taxation return to elect for taxation
deferral and subsequently remove the discount from assessable
No alteration to the existing cessation time provisions for
determining the deferred taxing point;
No new withholding tax measures;
Furthermore we support the initiative to expand the valuation
options available to entities, and a further widening of access to
tax refunds where shares are forfeited as a result of subsequent
We have outlined our specific issues in more detail in our
Submission to Treasury,
click here to view.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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