Inquiry into the tax treatment of employee share schemes

The House of Representatives Standing Committee on Tax and Revenue was tasked in early February this year with conducting an inquiry into the taxation of employee share schemes (ESSs), and issuing the Treasurer with a final report.

In 2015 the Government made a number of changes aimed at improving the taxation treatment and administrative arrangements for ESS. The current committee will inquire into the effectiveness of the 2015 ESS changes and examine the challenges faced by companies in setting up an ESS arrangement and how taxation treatment affects the structure of current ESS arrangements.

The committee says it will examine:

• how effective the changes in 2015 have been in their goal of bolstering entrepreneurship in Australia and supporting start-up companies
• the costs and benefits of these concessional taxation treatments, and deferred taxing points for options, to the broader community
• whether the current tax treatment of ESSs remains relevant to start-up companies and whether any changes are appropriate to ensure the taxation treatment remains relevant
• how companies currently structure their ESS arrangements and how taxation treatment affects these decisions
• the challenges faced by companies in setting up an ESS arrangement and how the standard documents by the ATO, and introduced in 2015, assist this process and whether additional improvements should be made.

Submissions are welcome, with the committee supplying guidance.