Treasury called for public submissions on the Employee Share Schemes Consultation Paper.
Chartered Accountants ANZ prepared and lodged its submission to Treasury on 21 May 2019.
CA ANZ supports the policy objective to reduce the time and cost burden for small businesses offering an Employee Share Scheme (ESS)
The key points of our submission:
- We support the policy objective to reduce the time and cost burden for small businesses offering an Employee Share Scheme (ESS) to help them attract, retain and motivate employees to grow their business. ESSs allow employers to provide flexible remuneration arrangements and financial incentives to key staff.
- Feedback from our members indicates that whilst the regulatory framework is complex and simplification would be welcome, it would only result in minor benefits to support small business.
- In our view, the primary barriers to small business using ESSs relate to the tax treatment of these schemes. In particular, the key issue with the tax treatment of ESSs is the default situation under Division 83A of the Income Tax Assessment Act 1997 (ITAA 1997) where the employee is taxed upfront on the acquisition of the share or right to shares at a discount without having the benefit of receiving any money to fund the tax liability. The tax impediments to ESSs often result in employees preferring not to participate in the scheme or employers abandoning the schemes or adopting alternate arrangements such as loan-backed schemes.