Government to make changes to employee share schemes
The government is set to make changes to legislation covering employee share schemes, proposing to double the current limit to allow companies to offer employees up to $10,000 each year.
As it currently stands, unlisted companies are able to offer employees $5,000 in eligible financial products in a 12 month period.
Treasurer Josh Frydenberg said the changes will help employers attract, retain, and motivate employees and grow their business.
“The Government is simplifying the current regulatory framework, reducing the time and cost burden for businesses, an initiative that is particularly important for startups in early stages of growth,” he said.
The government is also proposing to expand employee share schemes to include contribution plans, allowing an employee to make a monetary contribution to acquire eligible financial products.
It will also allow businesses to offer employee share schemes without disclosing “commercially sensitive financial information”, unless they’re otherwise obligated to do so.
The last major amendments to employee share schemes came into effect in 2015, when the Coalition government changed the way employees receiving share options are taxed.
The Labor government had in 2009 put in place measures to tax employees upon the receipt of their share options; this was later changed to see employees taxed when the options are converted into shares.
According to the latest Startup Muster report, 74 percent of startup employees have equity; while down slightly on 2017, where 78.9 percent had equity, these figures have jumped significantly over the last few years. Just over 40 percent of employees had equity in 2015, and 59.5 percent in 2015.
The report found 32 percent of employees with equity have a vesting period of between 1 to 12 months, while 16 percent have a vesting period of 36 to 48 months.
Featured Image | City of Melbourne/ That Startup Show / Photographer Wren Steiner