Amendment introduced to employee share scheme laws

Small Business Minister Bruce Billson today introduced an amendment to the laws surrounding employee share schemes, a move he said will boost Australia’s start-up sector and drive innovation.

The Tax and Superannuation Laws Amendment (Employee Share Schemes) Bill 2015 was introduced into the House this morning, removing impediments and creating a “start-up incentive” that aims to rebuild share schemes from the ground up.

The new legislation will see two main changes to the tax treatment of employee share schemes taking place:

  • Firstly, employees issued with options will no longer have to pay tax when options vest. They will generally be able to defer tax until they decide to convert options to shares.
  • Secondly, start-ups will be able to issue options or shares to employees at discounted rates. The discount on shares will be exempt from income tax, while discounts on options can be deferred.

“The Coalition will also extend the maximum time for tax deferral from seven years to 15 years, which will give companies more time to build their business and succeed,” Mr Billson said.

“The maximum individual ownership limit currently restricts employee ownership for those accessing the employee share scheme tax concessions. This Bill doubles this limit from five per cent to 10 per cent, which could help some founders and provide a boost for critical workplace team members.”

The amendments will come into effect for new shares and options issued from 1 July 2015.

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