Published on 01 Apr 15
by "THE TAX SPECIALIST" JOURNAL ARTICLE
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.