Employee Share Schemes

01 March 2016

Adele Townsend , Partner, Tax |

It’s fair to say that employee share schemes (ESS) have come in and out of favour with Australian businesses, and their employees, over recent years. In a large part, this was the result of changes to their tax treatment, which introduced a range of unhelpful barriers to the tax regime in 2009.

The new ESS landscape

Changes that took effect last year broke down a lot of these barriers, helping make ESS legislation more flexible and aligned to the realities of doing business today. Despite this, the changes are only of benefit if a company knows how to make the most of them.

If your company already has an ESS, is thinking of introducing one, or wants to reinvigorate one that lost traction under the previous regime, there are a range of tax implications you need to consider.

You must understand what barriers have been reduced under the new legislation and how this impacts your company. At a high level, the changes include:

  • Amending the problematic taxing points
  • Updating ESS valuation tables
  • Introducing safe harbour valuations
  • A new ESS for start-up entities.

Why ESS is worth the effort

Research from around the world proves the value that an ESS can bring to any business – from improved business performance and productivity, to improved staff retention and flow on benefits to the local community.

To realise these benefits, a company’s approach to its ESS must be part of a much bigger picture.


Employee share schemes operate best when they are part of a company’s growth strategy and employee remuneration offering.


Taking this approach allows a company’s leaders to structure the right package for the right people, and attract the people they need to drive growth. It also ensures cost management and effective taxation are kept top of mind throughout these types of decisions.

In our eBook Corporate Growth & Executive Remuneration – Employee Share Scheme: Making the most of a new era we outline the key considerations that different types of companies needs to think about when it comes to their ESS planning. We also use relevant examples to highlight the reduced barriers in the new legislation and provide a comprehensive list of benefits that a well-executed ESS can deliver for a business and its employees.

Click here to download this complimentary resource and learn more about how you can drive the growth of your business through a tailored ESS offering.

If your company manages an ESS, or is considering introducing one, I welcome your comments about the tax issues you’ve encountered. To find out more about how you can tackle these issues, please connect with me.