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Resurrecting employee share schemes


Changes to the taxation treatment of employee share schemes (ESS) have been announced, first as an exposure draft of legislation, then as an amending Bill, introduced into the parliament in March 2015. The changes will affect public and private companies which issue interests to employees or directors at a discount to market value as a means of remuneration, incentivisation, retention or raising capital. The proposed changes are a direct response to adverse consequences that have followed amendments made in 2009.

This article examines the proposed changes by considering the changes in the context of the evolution of the tax treatment of ESS in Australia since 1995. The article discusses deficiencies in the proposed changes, if they are to achieve their stated purpose, additional measures and alternative measures that should be considered, and the role that an anti-avoidance mentality has played in shaping federal tax policy in this area.

Author profile

Judith Choate CTA
Photo of author, Judith CHOATE Judith is the SA Legal Director with KPMG. Judy has practiced in commercial and corporate law and specialised in federal and state tax and revenue law for over 25 years, particularly those areas of tax law that have the most significant impact on corporate and commercial transactions. Her tax and revenue practice is underpinned by her deep understanding of commercial and corporate law, trusts, partnerships and joint ventures. Her contacts and her depth of knowledge and experience in tax and revenue law and practice have positioned her as a trusted source of advice for professional services firms. - Current at 16 June 2016
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