A Standing Committee report has recommended significant changes to the way employee stock plans are taxed, including increasing the value of available shares each month and imposing taxes by employees only after selling their assets. Actions.
The House Tax and Revenue Standing Committee presented its report on the tax treatment of employee stock schemes on Monday, finding the current regime “complicated and restrictive.”
The report, Owning a Share of Your Work: Tax Treatment of Employee Share Schemes, makes 18 recommendations.
The general recommendation is that employee shares should be treated as equity, for tax purposes. That means beneficiaries would be liable for taxes only when they sell those shares, through the current capital gains tax regime.
Other suggestions, aimed at making employee share schemes more accessible to more companies and employees, include removing a 15% cap on discounted share value; a reduction in disclosure requirements in some situations; and an increase in the value of the share that an employee can receive each month without tax liability.
Employees can currently receive up to $ 1,000 worth of shares per month, without paying income tax. The committee suggested increasing this to $ 50,000.
The report also asks the Productivity Commission to investigate how existing agreements can be improved by drawing inspiration from other regions.
It also suggests that the ATO collect and publish data on SEE usage, launch a public awareness campaign, and simplify its own SEE documentation to no more than two pages.
“Employee engagement schemes are important because they support startups, innovation, and startups, which are the engine of higher productivity in our country,” Committee Chairman and Liberal MP Jason Falinski said in a statement. .
“Higher productivity leads to sustainably higher wages, better products and services, greater competition and more choice. All of these results have a direct impact on the quality of life that Australian workers enjoy.
“Productivity is what makes life better, more affordable and easier.”
Measures to reform the employee engagement scheme rules were first announced in 2018, when Treasurer Josh Frydenberg and then-Minister of Small Business and Family Businesses Michaelia Cash suggested, in a joint statement, that the “complex framework and fragmented “was discouraging companies from running them.
More information on the reforms was announced in the 2021 federal budget, with the government promising to “cut red tape.” At that time, the value of shares that an unlisted company could offer to employees per year increased from $ 5,000 to $ 30,000.
The bill for those changes was revealed earlier this month, and the consultation remains open for submissions until August 25, 2021.
