The Federal Government’s draft changes to the Employee Share Scheme (ESS) have one problem — how to define a startup?
Under the government’s proposed changes, a business accessing the concession scheme must be incorporated for less than 10 years and shares in the company cannot be listed on an approved stock or securities exchange.
Deloitte Australia global employer services partner Rob Basker says the definition of a startup may need to be re-examined, posing the following question:
“If there is an aggregate turnover threshold and an incorporated maximum period of 10 years, does it matter if a company is listed or not?”
In its Barriers to Innovation submission on the amendments, Deloitte defined a startup as an Australian-based business with a consolidated revenue of $15 million a year or less, and providing products or services for no more than 10 years in Australia.
Despite this query, Basker says he’s pleased the government shared its views on a broader change to the tax on employee options as well as specific equity tax incentives for start-ups.
“While the draft of the new tax rules will need to be worked through to ensure the changes will be fully effective… the vast majority of our suggested changes have been included,” he said.
The table below outlines Deloitte’s recommendations and the proposed government changes.
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