The newly elected Australian Coalition government has just announced the approach it will take in respect of over 92 taxation issues which had previously been announced but never enacted. However, the government has not formally announced details of its policy regarding the taxation treatment of employee share and option arrangements.
The former Labor government had introduced some very unpopular taxation laws regarding the treatment of employee shares and options. The effect of these laws was to tax employees either on grant, on termination of employment, or when the risk of forfeiture of shares had lapsed. However, in many cases this resulted in employees being taxed without the ability to sell the shares to pay the necessary tax. The former Labor government had recognized that those laws were having an adverse effect, particularly for start-up companies, and had commenced a consultation process on possible amendment of those laws.
Prior to the election the new Coalition government has indicated a willingness to wind back these laws during its first term. Recent statements by the Communications Minister Malcolm Turnbull indicate that the Coalition still supports these changes, in particular for start-up companies, but details of how the revised laws might apply has not yet been released.