Australia’s Start-Up Tax Review Has Stalled In The Four Months Since The Federal Election Was Announced


A Federal Government review of start-up tax laws appears to have stalled since August, with Treasury unlikely to report back on its findings this month as planned.

Treasury invited the public to comment on administration and tax laws for employee share schemes (ESS), which have been a bugbear for Australian start-ups for years.

Under existing tax rules, employees are taxed on share options when they receive them. Critics say the rules force cash-strapped employees to prematurely exercise their options and sell their shares.

The former Labor government kicked off the review on August 2 after recognising in a June 12 report that “more could be done to support Australian start-ups by reducing the cost and complexity of administering ESSs”.

The review was to be undertaken by Treasury, the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education (DIICSRTE), and the Department of Broadband, Communications and the Digital Economy (DBCDE), but was put on ice just three days later in the lead up to the September election.

As of late last week, Treasury was still considering its next steps for the progression of the issue. The department has yet to respond to questions about the options under consideration and when a decision will be made.

Advisories and members of the start-up community who originally engaged with the review have not been formally advised on how it will progress beyond the August announcement that the Government had gone into caretaker mode.

But Business Insider Australia understands that key people involved in the review moved into new roles after the Coalition Government took power, especially as functions of the now-abolished DIICSTRE shifted to the Department of Industry and the DBCDE was replaced with the Department of Communications.

Most say that Treasury is unlikely to meet its December reporting deadline, as it focuses on other issues that the new Government has prioritised, such as superannuation and the Financial System Inquiry.

“The Government hasn’t said they’re going to bin the review,” one advisory said. “I’d hope that they’d expand it – the discussion paper talks about countries with far more generous schemes than what’s been proposed in Australia.”

Now read: Joe Hockey Is Promising To Fix Employee Share Option Tax Rules If A Coalition Government Is Elected