Key Points:
The Government's review of the taxation of employee
share schemes for start-up companies is to be
welcomed.
The Government has announced that it is going to look at
changing the rules governing employee share schemes for start-up
companies.
Back in August 2013, the Labor Government started a similar
process and issued a Treasury discussion paper. With the election
and change of Government, the process was put on hold.
The new employee share plan tax rules which came into play in
2009 have created significant problems, particularly for start-ups.
Previously, the "discount" on share options was only
taxed when an option was exercised. The new rules accelerated the
taxing time to the point at which the options vest. This means that
if an employee is granted an option, that employee needs to include
the market value of the option in assessable income in the year
that it is granted, unless the option is subject to forfeiture. The
problem with this
