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New approach to taxing employee shares welcomed by startups

A tax reform by the federal government will increase the scope of employers to issues employees with shares and stock options. Prior to 2009, employees receiving shares or stock options were able to defer paying tax, with many only paying CGT once they have disposed of the assets down the line. In order to increase budget revenue, the Labour government changed this arrangement, meaning that when an employee received shares, they incurred an immediate tax liability.

These restrictions meant that many startups often had to start paying employees higher salaries in order to retain talent. However, the benefits of startups being able to issues shares and stock options go beyond freeing up valuable cash flow. When employees have a stake in the future success of a startup commitment, motivation and engagement soar.

The federal government is considering a scheme modelled on a similar British approach, whereby the option to defer tax is limited to smaller companies. The Treasury is currently investigating what size thresholds will boost productivity without creating a problematic shortfall in budget revenue.

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Reviewing your super

July 19, 2018

The ATO is encouraging taxpayers to review their super this tax time.

Finding lost super or consolidating any unwanted multiple accounts can make a massive difference to your nest egg.

There is over $18 billion in lost and unclaimed super. Those who have changed their name, address, job or lived overseas are at high risk of having lost super.

During the last five years, more than $10.7 billion of super has been consolidated from over 2.1 million accounts through ATO online services.

The ATO is also reminding taxpayers that the new super deduction is available. Most people under 75 years of age can claim a tax deduction for personal after-tax super contributions.

Personal super contributions deductions provide a level of flexibility for young people that change jobs frequently, self-employed contractors, small business employees, freelancers and people whose employers do not offer salary sacrifice arrangements.

To claim a deduction for any personal super contributions made in 2017/18, you must lodge a notice of intent to claim a deduction with your fund and receive a confirmation letter from them before lodging your tax return.