ARTICLE · 06 JULY 2015

Finally! Changes to employee share scheme taxation regime are here

Norton Rose Fulbright Australia

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These changes allow taxing points to be deferred for longer and introduce a significant new concession for "start-ups".

AustraliaEmployment and HR

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Introduction

It feels like it has been a long time coming but the changes to the employee share scheme (ESS) taxation regime have passed both Houses of Parliament.

Taking effect from 1 July 2015, the changes allow taxing points to be deferred for longer and introduce a significant new concession for "start-ups".

Tax deferral period

The maximum period of tax deferral increases from 7 years to 15 years. While many employees will cash in their shares or options well before the end of the 15 year deferral period, this change will have the potential to provide for longer term alignment between the company and its employees and to reduce the risk of employees being hit with unfunded tax liabilities.

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