Discussion paper

Reform of the taxation of employee share schemes

5 Jun 2009

Following community concerns with the changes in the the taxation of employee share schemes announced on Budget night and the possible unintended adverse impacts, the government has fast-tracked the consultation process on this change. This consultation paper and exposure draft bill seeks to provide a point of reference for public submissions on the changes.

As outlined in the consultation paper, the government proposes that the taxation of discounts on employee share scheme shares and rights on acquisition will remain its starting principle. But the government will provide concessional tax treatment for particular schemes. The concessions are in the form of a tax exemption, or a tax deferral in limited circumstances.

To provide certainty to employers and employees currently participating in employee share schemes, 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.

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