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Aussie business gains helping hand to compete & grow

Employee Share Schemes (ESS)

Announced today, the Federal Government proposes new rules that will significantly improve Australia’s global competitiveness to secure top talent for industries developing big ideas.

Welcoming the changes that will ease the tax rules on employee share schemes (ESS), Australian businesses are now better able to compete with UK, US and Asia Pacific to attract and harness the right talent to grow businesses that are heavily invested in research and development and not generating significant income.

Private equity firms, technology and life science businesses are most likely to benefit from the changes according to Thomas Isbell, National Head of Global Mobility Services, Grant Thornton Australia.

“Mid-size businesses in the life Sciences & technology industries would considerably benefit from the use of a globally competitive employee share schemes as an important vehicle to combat wage inflation, while securing the best talent to grow with the business.

“Private equity firms will also welcome the changes as they will be able to better align the interested of key stakeholders of the businesses they are looking to acquire which is commonly carried out through ESS structures,” said Mr Isbell.

The proposed changes will defer taxation of rights (including options or performance rights) granted by all companies until such a time when they are converted into shares. Under the current regime, employees are being taxed upfront, before the benefit is realised, thus making Australian businesses less competitive to attract and retain top talent. This is in addition to attractive concessions being applied to start-ups.

“While we welcome any changes that improve the current ESS, we believe the proposed measures can be broadened to include other unlisted companies and smaller listed companies still in start-up phase.

“Additionally we await to see what the changes to valuation methodologies will look like in the hope that changes will not be too significant,” said Mr Isbell.

For more information, please contact:

Helina Lilley
National Public Relations Manager
+61 2 8297 2421
0437 725 520

About Grant Thornton
Grant Thornton Australia has more than 1,300 people working in offices in Adelaide, Brisbane, Cairns, Melbourne, Perth and Sydney. We are focussed on meeting the needs of dynamic, middle market clients and combine service breadth, depth of expertise and industry insight with an approachable “client first” mindset and a broad commercial perspective.

Grant Thornton is one of the world's leading organisations of independent assurance, tax and advisory firms. More than 35,000 Grant Thornton people, across over 100 countries, are focused on making a difference to clients, colleagues and the communities in which we live and work.

A firm recognised locally and globally:

  • 2014 Best managed international firm: MPF Awards For Management Excellence (Grant Thornton International)
  • 2013 Advisory Team of the Year: Thomson Reuters (Grant Thornton Australia)
  • 2013 Global Firm of the Year: British Accountancy Awards (Grant Thornton UK)
  • 2013 Network of the Year: International Accounting Bulletin (Grant Thornton International)