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Proposed changes to employee share schemes a disaster for employers and employees
- By Moore Stephens
- Published 14/05/2009
- Latest News
- Unrated
Media Release
For immediate release: Thursday, 14 May 2009
Proposed changes to employee share schemes a disaster for employers and employees
Moore Stephens today expressed grave concern about the consequences of the changes to employee share schemes announced in the 2009 Federal Budget.
Mr Michael Dundas, a Partner of Moore Stephens in Sydney, said the changes will have a significant negative impact on both employers and employees and will not achieve the Federal Government’s stated objectives. “If employees are unable to defer payment of tax on shares or options received as part of an employee share scheme until they are able to sell,” Mr Dundas said, “most employees would not be able to afford to participate in such schemes which would, in turn, make them ineffective to employers as remuneration and retention tools. This does not equate to an improvement in the fairness and integrity of the existing provisions.
“It is our view that most employers, if not all, would abolish their employee share schemes if these changes go ahead,” Mr Dundas continued. “This would be a significant retrograde step and would result in employers having less flexibility and fewer tools at their disposal in the remuneration of their staff. Ultimately, this is going to cost the Australian economy as it will have a negative impact on corporate productivity through the reduction of incentives,” Mr Dundas added.
Mr Michael van Schaik, an Associate Director of Moore Stephens in Melbourne, said Australian companies would be further impacted through their reduced ability to attract skilled foreign executives. “Internationally competitive remuneration packages are a vital tool in attracting high-quality foreign executives,” Mr van Schaik said. “Employee share schemes are a central plank of these packages and executives from other jurisdictions expect them,” he added.
“Under the changes proposed in the Federal Budget, an inbound executive will either be faced with an upfront tax bill on commencement of their employment,” Mr van Schaik said, “or an employee share scheme will not be available due to the tax constraints which means the best talent will look elsewhere for opportunities.”
Moore Stephens has made submissions on this issue to both the Institute of Chartered Accountants in Australia and the Taxation Institute of Australia.
About Moore Stephens
Moore Stephens is a leading national network of six independent firms of business advisors and chartered accountants in all mainland capital cities of Australia. All Moore Stephens firms are longstanding members of their local business communities and specialise in providing highly personalised, expert and commercially astute audit, accounting and advisory services to their clients.
All member firms are also independent members of Moore Stephens International Limited, a global network of 366 independent member firms with 647 offices in 98 countries and annual fees revenue of more than US$2.2 billion.
For Further information:
Michael Dundas, Partner, Moore Stephens Sydney
Phone: (02) 8236 7788 Mobile: 0418 922 321
Michael van Schaik, Associate Director, Moore Stephens Melbourne
Phone: (03) 8635 1835
Joel Lentin - Chief Operating Officer, Moore Stephens Australia
Phone: (03) 8635 1900 Mobile: 0412 105 945
For immediate release: Thursday, 14 May 2009
Proposed changes to employee share schemes a disaster for employers and employees
Moore Stephens today expressed grave concern about the consequences of the changes to employee share schemes announced in the 2009 Federal Budget.
Mr Michael Dundas, a Partner of Moore Stephens in Sydney, said the changes will have a significant negative impact on both employers and employees and will not achieve the Federal Government’s stated objectives. “If employees are unable to defer payment of tax on shares or options received as part of an employee share scheme until they are able to sell,” Mr Dundas said, “most employees would not be able to afford to participate in such schemes which would, in turn, make them ineffective to employers as remuneration and retention tools. This does not equate to an improvement in the fairness and integrity of the existing provisions.
“It is our view that most employers, if not all, would abolish their employee share schemes if these changes go ahead,” Mr Dundas continued. “This would be a significant retrograde step and would result in employers having less flexibility and fewer tools at their disposal in the remuneration of their staff. Ultimately, this is going to cost the Australian economy as it will have a negative impact on corporate productivity through the reduction of incentives,” Mr Dundas added.
Mr Michael van Schaik, an Associate Director of Moore Stephens in Melbourne, said Australian companies would be further impacted through their reduced ability to attract skilled foreign executives. “Internationally competitive remuneration packages are a vital tool in attracting high-quality foreign executives,” Mr van Schaik said. “Employee share schemes are a central plank of these packages and executives from other jurisdictions expect them,” he added.
“Under the changes proposed in the Federal Budget, an inbound executive will either be faced with an upfront tax bill on commencement of their employment,” Mr van Schaik said, “or an employee share scheme will not be available due to the tax constraints which means the best talent will look elsewhere for opportunities.”
Moore Stephens has made submissions on this issue to both the Institute of Chartered Accountants in Australia and the Taxation Institute of Australia.
About Moore Stephens
Moore Stephens is a leading national network of six independent firms of business advisors and chartered accountants in all mainland capital cities of Australia. All Moore Stephens firms are longstanding members of their local business communities and specialise in providing highly personalised, expert and commercially astute audit, accounting and advisory services to their clients.
All member firms are also independent members of Moore Stephens International Limited, a global network of 366 independent member firms with 647 offices in 98 countries and annual fees revenue of more than US$2.2 billion.
For Further information:
Michael Dundas, Partner, Moore Stephens Sydney
Phone: (02) 8236 7788 Mobile: 0418 922 321
Michael van Schaik, Associate Director, Moore Stephens Melbourne
Phone: (03) 8635 1835
Joel Lentin - Chief Operating Officer, Moore Stephens Australia
Phone: (03) 8635 1900 Mobile: 0412 105 945