The Australian Services Roundtable (ASR) is pleased to recognise the positive impact of recent changes made by the Abbott Government to improve taxation arrangements for employee share schemes.
The prior punitive arrangements for tax treatment of employee share schemes, which have been in place since 2009, have had a demonstrably negative impact on Australia’s ability to grow and resource start-ups and fast growth companies in the services sectors.
Under the new arrangements the Australian Government will reverse for all companies the changes made in 2009 to the taxing point for options. Employees who are issued with options under deferred tax schemes will generally be able to defer tax until they exercise the options, rather than having to pay tax when they receive the options.
ASR CEO Ian Birks commented “These much valued changes now bring Australia more closely in line with similar tax arrangements in other countries and provide a more level playing field for local start-up services companies to offer incentive arrangements that are competitive. The Government is to be applauded for listening to industry and responding with these changes.”
“However ASR believes that ongoing improvement in this area is still possible – for example, we would prefer that instead of taxing an employee when exercising the options, the point of taxation should occur at the time of actual sale of the shares acquired.” Birks added.