Employees of start-up companies can now invest in their firm at a discount of up to 15 per cent of market value, with that discount exempt from capital gains and income taxes.
Thanks to changes in the tax treatment of employee share schemes if the employee sells those shares any capital gains tax calculated on the market value is not calculated on the discount price they paid. This is as long as that discount was no more than 15 per cent of the market value.
The Australian Taxation Office (ATO) deputy commissioner, Steve Vesperman, said to qualify the company must be Australian for tax purposes, operating for less than ten years, have a turnover of no more than $50 million, and must not have shares listed on any stock exchange.
“Employee share schemes encourage a greater commitment by staff to the success of a business. This measure provides an even greater incentive to make that commitment by acquiring shares in the business at a discount,” he said.
Other changes to the scheme also include employees of any company see the five per cent limit on share ownership double to 10 per cent.
