25 March 2015
Media Release - #2015032, 2015

More restoring and rebuilding for Australian business

Today the Abbott Government takes yet another step to energise enterprise, to boost our start-up sector and ensure our best talent and ideas stay on our shores.

This morning I introduced the Tax and Superannuation Laws Amendment (Employee Share Schemes) Bill 2015 into the House.

The Bill improves and streamlines the taxation of employee share schemes. It removes key impediments introduced by the former Labor Government and creates a new ‘start-up’ incentive to restore and rebuild employee share schemes.

Employee share schemes offer employees a financial interest in the company they work for which align the interests of employees with the interest of their employers. Employee share schemes support and encourage innovation, driving growth in jobs and growth in productivity.

The Coalition knows that our country’s tax system should not be an impediment to innovative companies hoping to form successful start-ups and grow their business. It is these businesses that in turn employ people to grow our economy.

Because we are serious about getting this measure right and repairing the damage done by Labor, our Government has consulted extensively on this issue, and has listened to the concerns of a range of stakeholders

The legislation will make two main changes to the tax treatment of employee share schemes.

  • For all companies, employees who are issued with options will generally be able to defer tax until they exercise the options (convert the options to shares), rather than having to pay tax when those options vest.
  • Eligible start-ups will be able to issue options or shares to their employees at a small discount, and have that discount exempt (for shares) or further deferred (for options) from income tax.

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.

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.

These measures are about more than just providing a benefit to companies and employees engaged in employee share schemes. It adds to and supports our economy as a whole as we retain Australian talent and better support Australian innovation and entrepreneurship.

The amendments will help stimulate the growth of high technology start-ups in Australia by making Australia a more attractive destination for innovative companies seeking to commercialise their ideas domestically.

These amendments go to our commitment to ensure Australia is the very best place to start and build a small business – we are committed to bolstering entrepreneurship and innovation in Australia.

The Government intends to bring the amendments into effect for new shares and options issued from 1 July 2015.