Employee Share Schemes, Treasury

In the 2021-22 Budget, the Government announced changes to regulatory and tax arrangements for employee share schemes.

This exposure draft legislation implements the 2021-22 Budget measure, plus the regulatory reforms previously publicly consulted on in April 2019.

In respect of the regulatory reforms, changes relative to what was consulted on previously include:

  • completely removing Corporations Act 2001 requirements for ESS offers to employees who do not pay or incur debt to participate in these schemes;
  • increase the value cap, under which Corporations Act 2001 requirements do not apply, to $30,000 for all other ESS offers of unlisted companies;
  • consolidating exemptions and class order relief from disclosure, licensing, hawking, advertising and other obligations under the Corporations Act 2001;
  • expanding relief for unlisted companies to include contribution plans and limited or no recourse loans, where an employee can make a monetary contribution to acquire eligible financial products;
  • relaxation of the requirements to lodge disclosure documents.

By removing these regulatory barriers, it will be easier for a viable, but cash poor, business to hire employees with ESS offers, in addition to wages.

The tax reforms remove the cessation of employment taxing point for the tax-deferred ESS that are available for all companies. Tax will be deferred until the earliest of the remaining taxing points.

These reforms will make it easier for businesses to offer ESS and will support Australian businesses to attract and retain the talent they need to compete on the global stage.

The Government is seeking stakeholder views on the exposure draft legislation and explanatory materials to give effect to these reforms.

Public consultation on the exposure draft legislation and explanatory material will close on 25 August 2021.

Exposure Draft Legislation – Regulatory

Explanatory Materials – Regulatory

Exposure Draft Legislation – Tax

Explanatory Materials – Tax


Venture Capital Tax Concessions Review, Treasury and Industry Innovation and Science Australia

The venture capital sector is a strong part of the Australian economy. Recent trends demonstrate a growing Australian venture capital industry with a record $1.3 billion raised in 2020, compared to $200 million in 2013, according to the Australian Investment Council. This capital provides startups and small innovative businesses with funds for projects that can lead to technology improvements and boost productivity growth.

As part of the 2016 National Innovation and Science Agenda, the Government implemented reforms to enhance the concessional treatment of the Early Stage Venture Capital Limited Partnership (ESVCLP) program to target this concession towards ventures at the early stages of the lifecycle of a developing startup. Five years on, now is the appropriate time to evaluate the impact of these tax concessions.

To ensure current venture capital tax concessions support genuine early stage Australian startups, the Government announced a review into the tax treatment of venture capital, with the Terms of Reference (ToR) for the review released on 7 July 2021. The ToR includes a consultation phase as a means for stakeholders to offer views and provide evidence on the operation of the in-scope concessions. The Review will consider the consultation findings alongside qualitative and available quantitative data. All findings will be summarised in a report to be delivered to the Treasurer, and tabled in Parliament.

The review will be undertaken by Treasury and Industry Innovation and Science Australia (IISA) and will cover the ESVCLP, the Venture Capital Limited Partnership (VCLP), and the Australian Fund of Funds (AFOF) programs.

The closing date for submissions is Friday, 3 September 2021.

Consultation Paper


Review of low value imported goods, Board of Taxation

On 5 July 2021 the Government announced that the Board of Taxation would undertake a review into the Low Value Imported Goods (LVIG) measure which facilitates the addition of Goods and Services Tax (GST) on low value imported goods.

The Board will assess the effectiveness of the LVIG regime and provide advice regarding its ongoing operation.

The Board of Taxation is asked to do the following:

  1. Assess the effectiveness of the LVIG regime to efficiently collect GST with reference to the policy intent of the law that low value goods imported by consumers face the same tax regime as goods that are sourced domestically. In doing so, the review will:
    1.1 assess the effectiveness of the administration of the measure;
    1.2 assess industry compliance with the LVIG rules;
    1.3 undertake a targeted external consultation process, working closely and collaboratively with the Treasury, Australian Taxation Office, and Australian Border Force;
    1.4 examine the issues identified in the consultation process; and
    1.5 provide any observations, findings, and appropriate recommendations for improvements and certainty to the ongoing operation of the LVIG regime.
  2. Report on and assess any relevant international developments and experiences regarding the collection of GST and other consumption taxes on LVIG.

The Board is asked to report back to the Government by 17 December 2021.

Stakeholders are invited to provide early feedback by way of an informal email on key issues to [email protected].


Inquiry into alternative financing mechanisms, Joint Committee of Public Accounts and Audit

The Joint Committee of Public Accounts and Audit is conducting an inquiry into the use of alternative financing mechanisms in government expenditure.

The Committee invites submissions to the inquiry, addressing the terms of reference by Friday, 13 August 2021.

The Committee will have particular regard to the issues raised in the Parliamentary Budget Office report no. 01/2020, Alternative financing of government policies – Understanding the fiscal costs and risks of loans, equity injections and guarantees, including:

  • the reasons for and effects of governments funding programs through alternative approaches;
  • the costs associated with different policies; and
  • the reporting in Budget papers of programs funded through alternative approaches.

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