Industry-Innovation-and-Competitiveness-Agenda

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Industry Innovation and Competitiveness Agenda
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The Government also recognises the importance of giving start-ups the best chance of
succeeding and keeping Australian companies competitive in an international economy,
which includes giving entrepreneurial start-ups the chance to employ the best people.
In addition to the changes being made for all companies, eligible start-ups will be able
to offer ESS shares and options to their employees at a small discount, and have that
discount exempt from up-front taxation, as long as the shares or options are held by
the employee for at least three years. Tax on the discount provided by the employer
may be deferred or exempt depending on whether the employee receives options
or shares. Criteria will define eligibility for this concessional treatment, including the
company having aggregate turnover of not more than $50 million, being unlisted and
being incorporated for less than 10 years.
Furthermore, to give start-ups more time to be competitive and succeed, the
Government will extend the maximum time for tax deferral from seven years to 15 years.
The Government will also update the ‘safe harbour’ valuation tables, which are used by
companies to value their options, so they reflect current market conditions. The integrity
provisions introduced in 2009 and the $1,000 up-front tax concession for employees
who earn less than $180,000 per year will be retained.
This initiative will cost $200 million over four years.
Companies in the early stages of development may face problems with valuation and
liquidity. The Australian Taxation Office will work with industry to develop and approve
new standardised documentation that streamlines the process of establishing and
maintaining an ESS. The Australian Securities and Investment Commission will also be
consulted, given its oversight of disclosure documents involving the offer of financial
products (like options and shares).
The Treasurer will consult with industry to ensure that the draft legislation delivers the
intended outcome, with the legislation proposed to come into effect on 1 July 2015.
78 Industry Innovation and Competitiveness Agenda