Review into elements of the taxation of employee share scheme arrangements
The Board has completed its review into elements of the taxation of employee share schemes and provided its report to the Assistant Treasurer. In preparing its report the Board took into account the various submissions to the review and discussions with stakeholders. In line with past practice, the Board's report is expected to be available at the time the Government releases its response to the report.
Terms of Reference
The Board has been requested to examine:
- how best to determine the market value of employee share scheme securities; and
- whether shares and rights under an employee share scheme that are provided by start-up, research and development and speculative-type companies should be subject to separate tax deferral arrangements outside of those proposed by the Policy Statement.
In undertaking the review, the Board is to consider:
- whether the existing rules for valuing unlisted rights to acquire shares properly reflect market value;
- whether special rules are appropriate or necessary to determine the market value of employee share scheme shares and rights (listed and unlisted);
- whether there are suitable alternative mechanisms for determining market value;
- whether it is appropriate or necessary to provide separate deferral arrangements for employees of start-up, research and development and speculative-type companies receiving shares or rights under employee share schemes; and
- possible options to provide assistance to start-up, research and development and speculative‑type companies.
In conducting the review, the Board is to have regard to the Government's taxation review headed by Dr Ken Henry. Further information on the Review of Australia's future tax system can be found at www.taxreview.treasury.gov.au
Background
On 1 July 2009, the Assistant Treasurer released a Policy Statement setting out the final taxation treatment of shares and rights acquired under employee share schemes, with the policy to be applied from that date.
On 24 July 2009, the Assistant Treasurer released the details of the industry consultation and the terms of reference for the Board’s review into elements of the taxation of employee scheme arrangements.
The aspects of employee share schemes that were be subject to the review are:
- Market valuation of employee share scheme benefits; and
- Start-up, research and development and speculative-type companies.
The Board was asked to consult widely and to provide all stakeholders with the opportunity to participate in the review. After considering the views of all stakeholders the Board was to provide a final report to the Government by the end of February 2010.
On 7 September 2009, the Chairman of the Board of Taxation announced that the Board was inviting submissions for its review into elements of the taxation of employee share schemes.
The Board requested written submissions on the review into elements of the taxation of employee share scheme arrangements by 9 October 2009. All submissions received were acknowledged. Copies of public submissions made to the Board are available from the Employee Share Schemes Submissions page.
Further information on this review can be obtained from Jorge del Busto (02 6263 4365) and Vernon Joice (02 6263 4369) at the Board of Taxation Secretariat.
