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Employee Share Plans

Published on 23 Oct 2013 | Took place at The Tax Institute, Sydney , NSW

    Incentivising employees is a perennial problem. Providing a key employee access to an interest in the success/profitability of the business is often seen as a good idea. Yet there will be impediments (particularly in the way that the tax laws apply) and consequences depending on how it is approached/achieved.
    For listed entities decisions normally will apply to a larger group of employees and will usually be more consistent. However, with SMEs it is expected offerings will be made on an individual basis and will need to have regard to the perceived importance of the person to the business. This can lead to multiple arrangements arising, each with potentially different tax consequences for the employer and the employee.
    This session explored this area with a focus on both the big picture and many of the critical points of detail.

Individual sessions

Approaches to incenitivising employees by listed entities and SMEs using employee share plans

Author(s):  Rob BASKER,  Sandra BUTH

This paper covers:

  • what are the most common type of plans? i.e. outright buy shares at a discount, offer options, buy shares atmarket value with favourable loan, performance rights
  • why offer one type over another?
  • are we still using them and why or why not?
  • a brief coverage of Div 7A and FBT
  • is there a specific type of plan for different industries or business cycles
  • what are some of these vanilla plans
  • why go down the route of this plan versus another
  • how do the numbers stack up?
  • what are the advantages and disadvantages
  • would you recommend the different plans be in individuals, trust or SMSF name, why or why not?
  • is it still worth offering any of these plans?
Materials from this session: