In the 2021-22 Budget, the Government announced changes to regulatory and tax arrangements for employee share schemes.
This exposure draft legislation implements the 2021-22 Budget measure, plus the regulatory reforms previously publicly consulted on in April 2019.
In respect of the regulatory reforms, changes relative to what was consulted on previously include:
- completely removing Corporations Act 2001 requirements for ESS offers to employees who do not pay or incur debt to participate in these schemes;
- increase the value cap, under which Corporations Act 2001 requirements do not apply, to $30,000 for all other ESS offers of unlisted companies;
- consolidating exemptions and class order relief from disclosure, licensing, hawking, advertising and other obligations under the Corporations Act 2001;
- expanding relief for unlisted companies to include contribution plans and limited or no recourse loans, where an employee can make a monetary contribution to acquire eligible financial products;
- relaxation of the requirements to lodge disclosure documents.
By removing these regulatory barriers, it will be easier for a viable, but cash poor, business to hire employees with ESS offers, in addition to wages.
The tax reforms remove the cessation of employment taxing point for the tax-deferred ESS that are available for all companies. Tax will be deferred until the earliest of the remaining taxing points.
These reforms will make it easier for businesses to offer ESS and will support Australian businesses to attract and retain the talent they need to compete on the global stage.
The Government is seeking stakeholder views on the exposure draft legislation and explanatory materials to give effect to these reforms.
Public consultation on the exposure draft legislation and explanatory material will close on 25 August 2021.