These highly valuable benefits fell into disfavour following amendments to the taxing provisions introduced by the previous Government.
New rules have been legislated with effect from 1 July 2015. Employees, who receive options and other ESS interests as remuneration from that date, will be taxed under the new rules subject to some transitional provisions.
Employees, who receive options, will generally be taxed when they exercise those options. Previously, they were taxed on the granting of the options.
If an employee chooses to let the option lapse, he or she will be able to claim a refund of any tax already paid under the old rules for those options.
Businesses will need to comply with annual reporting requirements which will require reporting when a taxing point occurs for one or more employees during the relevant financial year.
Employers must provide an ESS Statement to employees by 14 July and an ESS Annual Report to the Tax Office by 14 August. Data will be matched from these reports to the information in individual Tax Returns.
Andrew and Tony Lovett
11 August 2015
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