In the last edition of eBulletin the Institute reported that Tax Counsel Yasser El-Ansary met with the Treasurer's Office on Friday, 29 May 2009 to discuss employee share schemes.  
 
On Friday, 5 June the government released a consultation paper and exposure draft bill on the reform of the taxation of employee share schemes. The paper proposes lifting the income threshold which applies to $1,000 of tax-exempt shares to $150,000 from the $60,000 previously announced. The paper also proposes tightening reporting requirements on business and allowing employees to defer paying tax in certain circumstances if there is a "real risk of forfeiture" attached to the shares or options. 
 
Of note, the government proposes that the new arrangements commence on 1 July 2009. In the interim, the existing law will apply to all shares and rights acquired before 1 July 2009. This announcement echoes the Institute's recommendation in terms of providing certainty for business in the lead up to the 30 June year end. 
 
Mr El-Ansary said that while the approach outlined in the consultation paper was a step in the right direction, the income test and the changes to the deferral rules would impose more complexity into the tax system.  
 
'It remains to be seen whether businesses will decide that the benefits of employee share schemes outweigh the complexity of implementing those schemes,' he said.  
 
The Institute has already made its first submission to the Treasurer following the Budget announcement and will be lodging its response to the government’s consultation paper by Friday, 12 June.  
 
The government announced tax changes to the schemes in the 2009-2010 Federal Budget. Since Budget Night, the Institute has been actively involved in discussions with the Treasurer and Assistant Treasurer's Offices, ultimately putting forward a case for a reversal of the proposed changes. The Institute’s position continues to be widely reported in major newspapers, including the Australian Financial Review, the Australian and the Sydney Morning Herald. 
 
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Relevant links: 

• The Institute: Employee share schemes briefing paper
 

• The Institute: Media release
 

• Australian government: Consultation paper