The Minister for Small Business Bruce Billson will introduce long-awaited changes to Employee Share Scheme legislation into parliament today.
In a statement Billson outlined the new scheme:
– For companies and employees who are issued with options will generally be able to defer tax until they exercise the options (convert the options to shares), rather than having to pay tax when those options vest.
– Eligible start-ups will be able to issue options or shares to their employees at a small discount, and have that discount exempt (for shares) or further deferred (for options) from income tax.
– The maximum time for tax deferral will be extended from seven to 15 years.
– The maximum individual ownership limit for accessing employee share scheme tax concessions will be increased from 5 per cent to 10 per cent.
– Eligible startups need to have an annual turnover of less than $50 million.
In an interview with The Australian Financial Review’s Phillip Coorey Billson gave a few more details.
– In the event a startup raises venture capital, that will not affect the eligibility threshold.
– If a startup is acquired before it has operated for three years, its original shareholders will still get their 15 per cent tax deduction on the sale of the shares.
StartupSmart is speaking to Billson at 12.45pm. If you’d like any clarification let us know and we’ll put your questions to the minister.