Despite increasing criticism from business groups and unions about the Rudd Government’s proposed changes to employee share ownership schemes, Prime Minister Kevin Rudd is standing firm on his decision.
The Government believes the move is designed to target high-income earners who are using the scheme for tax minimisation. The scheme means that employees have to pay tax on their shares up front, as opposed to being able to choose when to pay the tax.
The business community has been highly critical of the changes, which will target anyone earning over $60,000.
Mr Rudd said the changes were needed in order for the Budget to return to surplus. He argued that while it is not a “popular” move, there will be “implementations agreements and technical details to be sorted out for affected industries.”
Mr Michael Dundas, a Partner of Moore Stephens said the changes were a ‘disaster’ for business.
Dundas believes that under these changes, most employers would abolish their employee share schemes, and therefore would result in “employers having less flexibility and fewer tools at their disposal in the remuneration of their staff.”
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