Changes to Aussie employee share schemes for start-up companies came into effect from 1st July 2015
Employee share schemes (ESS) provide an opportunity for employees to receive shares (or options to buy shares) in the company they work for.
The Australian government has made changes to the tax rules for employee share schemes to make it more attractive to employers and employees to participate, including a new concession for start-up companies.
Changes to employee share schemes include:
when options are taxed
increasing the maximum ownership limit to 10% of the total shares (up from 5%)
increasing the deferral period to 15 years (up from seven years) for tax deferred schemes.
Additional concessions for start-up companies
Under the new rules if shares are acquired in a start-up at a discount of up to 15% (relative to market value), then the discount is exempt from income tax. The shares will only be subject to capital gains tax on disposal.
What is a start-up?
Start-up companies, from any industry, need to:
be incorporated for less than 10 years
be an Australian resident company
have no equity interests listed on an approved stock exchange
have an aggregated turnover less than $50 million.
What you need to know?
The Australian government have published a guide for employers and standard templates for start-up companies to help you develop and maintain an employee share scheme. We have also developed a guide for employees to help them in making decisions to participate.
Find out more at:- www.ato.gov.au
Employee share schemes
ESS: Guide for employers
ESS: Guide for employees
Aussie small businesses – Instant tax deduction – asset threshold increase to $20,000 is now law
Small businesses can obtain an immediate tax deduction for assets acquired costing less than $20,000 purchased since 7.30pm 12 May 2015.
You can use the new threshold amounts in claiming deductions in your 2015 income tax return. The deduction is claimed in the income year in which the asset is first used or installed ready for use.
The instant asset write-off threshold has increased to $20,000 (up from $1,000). This allows you to immediately deduct the business use portion of a depreciating asset that costs less than $20,000.
The changes apply to assets acquired after 7.30pm on 12 May 2015 until 30 June 2017,
on a per asset basis, so several assets each costing less than $20,000 would qualify,
to new and second hand assets.
Assets that cost $20,000 or more (which can’t be immediately deducted) will continue to be deducted over time using a small business pool.
The low pool value threshold will also increase to $20,000. This means that an immediate deduction is available if the pool balance is less than $20,000 at the end of an income year.
What’s not included?
There are a small number of assets that aren’t eligible for accelerated depreciation, for example horticultural plants that have specialised depreciation rules.
Just like any other business asset, you’ll need to keep records to support any claims for a deduction. This includes the ongoing business use of an asset and its eventual disposal. The ATO has a risk-based program to identify taxpayers that are not meeting their obligations and will take measured approaches to influence taxpayer behaviour.
Find out more at:- ato.gov.au
Growing Jobs and Small Business – expanding accelerated depreciation for small businesses