Date posted: 13/05/2021

Submission on employer party to employee share scheme

We recently provided feedback on a draft QWBA - when does and employer’s expenditure or loss under s DV 27(6) or income under s DV27(9) arise?

The draft QWBA addresses when an employer can claim a deduction for the deemed expenditure that arises as a result of providing an employee with a benefit under an employee share scheme.  

It also addresses when deemed income will arise for the employer if the employee has a loss (e.g. the share value is less than the consideration paid).  In this case, the employee is entitled to a deduction.

Put simply, the deemed expenditure is deductible at the same time the employee recognises the income.   Deemed income for the employer arises when the employee can claim a deduction.

As part of our submissions Chartered Accountants Australia and New Zealand:

  • Recommends the document be simplified if the ‘QWBA’ format is retained,
  • Notes that in our view there is no uncertainty regarding timing, and
  • Make suggestions to improve the first example of the draft item.