The Division 83A (employee share plan) amendments were tabled in Parliament yesterday, 25 March 2015, and include welcome improvements on the exposure draft released last January (see our Riposte on the exposure draft legislation).
Most of the changes concern the new start-up company regime, which the Bill confirms will commence on 1 July 2015 – it will apply to grants on and after that date:
Listed companies will remain excluded.
Qualifying start-ups will be able to provide employees with at-the-money options free of tax until sale of the shares acquired on exercise. Gains on sale will be subject to CGT rather than income tax ie, able to be reduced by any available capital losses and eligible for the 50% CGT discount.
The ATO is now preparing model plan documents and the acid is on ASIC to come up with a regulatory framework which will allow the new regime to work as planned. Class order CO 14/1001 released in December last year for unlisted companies would stall the new regime if left unchecked.
The Bill doesn’t make any substantive modifications of the exposure draft for large public company offers. Tax at cessation of employment remains – we can now only look to the pending Government white paper on that front. The problem for Government is that while its removal would only change the timing of tax collections, the initial hiatus would amount to a permanent gap.
Nevertheless, remember the good work already reflected in the exposure draft:
Freehills Patent Attorneys is associated with Herbert Smith Freehills Pty Ltd. This article was first published on the Greenwoods and Herbert Smith Freehills website, and was written by Adrian O'Shannessy (Director) and Cameron Blackwood (Senior Associate).