Has your company/parent company provided free or discounted shares, performance rights or options (ESS interests) to employees, directors or individual consultants/ nominees (‘employees’) during or prior to the income year ending 30 June 2016, and have these ESS interests ‘vested’ during the 2016 income year?

If so, there’s a strong possibility that:

  • Some or all of these employees have triggered a taxing point during the 2016 income year on their ESS interests and need to disclose an assessable Employee Share Scheme (ESS) discount in their 2016 tax return; and
  • Your company (or parent company) has an obligation to report the details of these ESS discounts to both the recipient employees and the Australian Tax Office (ATO) at the end of the 2016 income year.

Generally, it’s likely that an ESS reporting obligation will arise in the 2016 income year if a vesting event occurs during the year regarding an employee’s ESS interests.  However, an ESS taxing point may arise at other times such as on grant, exercise or cessation of employment, or when any disposal restrictions are first lifted. 

We recommend you pay close attention to determining the correct income year in which a taxing point occurs and the market value of the employee’s ESS interests at the relevant time. The ESS reporting deadlines for 2016 are:

  • 14 July 2016 – Employers need to provide an ESS Statement to each employee who has had a taxing point on their ESS interests during the 2016 income year.  An ESS Statement is similar to a PAYG Payment Summary and reports the assessable ESS discount amount to help the employee prepare their 2016 income tax return.
  • 14 August 2016 – Employers need to submit to the ATO a report of all 2016 ESS Statements provided to employees.

If you’re unsure whether your company has a 2016 ESS reporting obligation, or need further assistance, Grant Thornton’s Remuneration Taxes Group is on hand to provide expert ESS tax and compliance improvement advice.

Please contact any one of our Employee Share Scheme specialists:

Peter Hills
Partner - Tax
T +61 8 9480 2126
E peter.hills@au.gt.com

Stephen Frapple
Associate Director - Tax
T +61 8 9480 2135
E stephen.frapple@au.gt.com

Or your local Grant Thornton remuneration taxes specialists:

Elizabeth Lucas
Partner - Tax
T +61 3 8663 6349
E elizabeth.lucas@au.gt.com

Thomas Isbell
Associate Director - Tax
T +61 2 9286 5689
E thomas.isbell@au.gt.com