A final policy statement setting out the new taxation laws for employee share schemes has been released by new Assistant Treasurer Senator Nick Sherry, but it has already attracted some criticism from within the industry.
The new policy, effective from yesterday, the first day of the 2010 financial year, represents a policy shift from the Government’s Budget announcement that all discounts on shares and rights provided under an employee share scheme would be assessed in the income year in which the shares and rights are acquired.
It also represents a shift away from subsequent policy modifications contained in a public consultation paper released last month, following an ongoing outcry by business, unions and industry experts.
“The Government has adopted the changes proposed in the consultation paper with several final modifications to address some of the concerns raised during the consultation period,” Sherry said.
“This final policy provides further certainty to allow companies to continue to provide share schemes into the future,” he said.
The key changes in the final policy are an increase in the income tax threshold for eligibility for the upfront tax concessions to $180,000, to align it with the top marginal tax rate threshold.
It also provides “further clarity on the meaning of real risk of forfeiture” and “moves the deferred taxing point from a point at which the taxpayer will no longer have a real risk of losing the share or right”.
However, Remuneration Strategies group director Garry Fitton criticised the final policy as “unnecessarily complex” and largely “a return to the old regime” (that existed before Budget night).
“It’s much more like the old regime in that if it is subject to forfeiture and there are no restrictions on disposal, you will still get (tax) deferral,” he said.
