Australia Plans to Change Taxation of Stock Plans

On October 14, the Australian government announced that it will develop new legislation to encourage employee stock plans that would come into effect in July 2015. The changes are in response to 2009 legislation, which has had the effect of strongly discouraging companies from using stock plans. The press release notes that "The Government will reverse for all companies the changes made in 2009 to the taxing point for options, while retaining the integrity provisions that were introduced at that time." Under the new legislation, options would no longer be taxed at vesting and would instead generally be taxed at exercise. Small, privately held startups would be eligible for tax benefits. Options that meet certain criteria would be eligible for a deferral of capital gains tax, and shares issued at a discount would be eligible for a tax exemption.