Corrs In Brief: Federal Budget 2009-2010 - Employee Share Schemes and Tax - the Phantom Menace?
15 May 2009
In a surprise move which has made the front page of the Australian Financial Review two days in a row and been the subject of an editorial, the Government has announced two important changes to the taxation of employee share and option plans in the 2009-2010 Federal Budget. The proposed changes are intended to:
- remove the ability to defer tax on the discount to the market value of shares and options acquired under an employee share scheme. This means that employees will be taxed on the discount they receive in the income year in which shares or options are acquired; and
- limit the tax exemption sometimes available for the first $1,000 of discount on shares and options acquired under an employee share scheme to those employees with adjusted taxable income of less than $60,000.
The changes are proposed to apply to shares and options granted after 7:30pm on Budget night (12 May 2009).
Assuming the changes are implemented in accordance with the announcement, it calls into question the future for employee share schemes in Australia and demands consideration of alternative equity based employee remuneration.
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