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Law Council of Australia

Business Law Section

Employee Share Schemes – Exposure Draft Legislation

The submission to Treasury in response to the exposure draft legislation implementing the reforms to Employee Shares Schemes in 2019, and the changes to regulatory and tax arrangements for Employee Share Schemes (ESS) that the Government announced in the 2021-22 Budget (Exposure Draft Legislation), was prepared by the Corporations Committee and Taxation Law Committee of the Business Law Section (the Committees).

The Commonwealth Government has announced proposals to improve the ability of businesses to offer an ESS to help them attract, retain and motivate employees and grow the businesses.

The Committees are supportive of legislative amendments in the area of ESS and consider that the possibility of allowing businesses to make offers of ESS interests without the need to make disclosure, or be capped in the size or value of those grants, is precisely what is needed to help simplify an unnecessarily complex area for businesses operating in Australia and to promote innovation and employment growth.

The Committees also consider that the proposed removal of the deferred taxing point at the cessation of employment is an important step in allowing Australian businesses to attract and retain talent on a global stage. However, the Committees consider that the current proposals outlined in the Exposure Draft Legislation (and which are addressed in further detail in the submission) have some shortcomings that will prevent the changes from encouraging innovation in Australia and supporting business (in particular, those that are unlisted or smaller listed businesses).

You can read the full submission below.


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