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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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Transition to retirement

November 25, 2020

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.