Employee shares - New rules apply

A major revamp to the Employee Share Scheme (ESS) rules was announced in the 2009/10 Federal Budget. After much public consultation the new rules have now passed into law and apply to schemes entered into since 30 June 2009. Transitional rules apply to schemes entered into earlier that have not yet been taxed.

Some of the main changes to the rules include:

	You can no longer choose when to tax the discount received from acquiring shares or options from an ESS
	The $1,000 exemption on employee shares is now means tested and is not available if your adjusted taxable income exceeds $180,000.
	If you are forced to defer paying tax on your ESS, the maximum time allowed for the deferments has been reduced to seven years.

Under the new rules, the reporting responsibility has now substantially shifted from the employee to the employer, requiring that ESS information be disclosed in an employee’s PAYG Payment Summary.

For more information, see our FocusOn Employee Share Acquisition Schemes. However, if you own shares acquired from an Employee Share Scheme or you are planning to undertake such an arrangement, we recommend you speak to Saward Dawson.

Published : 20 February 2010