Employee share scheme eligibility from 13 May 2009
Under the current rules an employee can elect to be assessed on discounts provided on shares or rights in the year they are acquired under an employee share scheme.
If no election is made the discount is taxed at a later time. If the employee makes an election to be taxed upfront they receive a tax exemption of up to $1,000 on the discount.
The proposed measure will:
- remove the existing election and access to discounts provided on shares or rights in the financial year they are acquired. Consequently, removal of the tax deferral option will ensure that remuneration in the form of share discounts are taxed at an appropriate time and rate and will result in a reduction of tax avoidance opportunities, and
- limit access to the upfront concession to employees with an adjusted taxable income of less than $60,000 per year, resulting in a better take-up and availability of employee share arrangements by low and middle income earners.