Unions have warned that they will seek larger wage rises if companies are forced to scrap employee share schemes as a result of the Federal Government's decision to crackdown on the schemes in the federal budget.
The Financial Sector Union and the Australian Workers Union says employee share schemes have become an important part of enterprise bargaining agreements for workers at listed companies. The unions have written to Assistant Treasurer Chris Bowen seeking an increase in the $60,000 cut-off for people receiving up-front tax benefits from share schemes.
If the unions are not successful in getting the cut-off lifted, they will need to take action.
"If our members are going to lose a form of remuneration, we're certainly not going to allow them to be left worse off," AWU national secretary Paul Howes told The Australian Financial Review.
"If they are going to be losing something we would seek to have it rectified somewhere else."
The venture capital sector has also expressed disappointment in the share scheme crackdown, arguing entrepreneurs who are forced to pay tax up-front on shares in a business that has a high risk of failure may be discouraged from starting a business.
The chief executive of the Australian Private Equity and Venture Capital Association, Katherine Woodthorpe, has suggested that the Government provide some sort of carve-out for small businesses under the new employee share scheme rules.
She suggests the carve-out that will be available under the Government's new 45% R&D tax credit - which excludes companies with turnover $20 million or less - could protect start-ups and small businesses from the share scheme crackdown.
While the Government is sticking by its decision to change the rules around employee share schemes, it appears that it has underestimated the reaction it has caused.
While corporate governance expert Dean Paatsch from Riskmetrics has supported the crackdown, on the grounds that the Government could reap more than $100 million a year from top executives who use share schemes to defer tax, the fact that most share schemes around the country have been suspended or are under review as a result of the budget changes places some doubt on this prediction.
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