Changes made to employee share scheme

The government has announced changes to the employee share scheme to improve the ability for small businesses to offer the initiative to employees to help grow their business.

Under the altered regime, the government said it proposes to simplify and extend the initiative by:

  • creating a dedicated exemption for disclosure, licensing, advertising and on-sale obligations under the Corporations Act 2001;
  • increasing the value limit of eligible financial products that can be offered in a 12-month period from $5,000 per employee to $10,000 per employee;
  • expanding employee share schemes to include contribution plans, where an employee can make a monetary contribution to acquire eligible financial products; and
  • allowing small businesses to offer employee share schemes without publicly disclosing commercially sensitive financial information unless they are otherwise obligated to.

Treasurer Josh Frydenberg said the initiative will simplify the current regulatory framework, help employers attract, retain and motivate employees, and reduce the time and cost burden for businesses.

He added that the measure is particularly important for start-ups in the early stages of growth.

“Employee share schemes allow employees to invest in the business for which they work. They are offered as an incentive to employees, allowing them to share in the growth and success of the business,” Mr Frydenberg said.

“The current regulatory framework is too complex and fragmented and ultimately discourages businesses – particularly, small businesses – from offering employee share schemes.”

Mr Frydenberg also said the changes build on improvements the government has already made to make employee share schemes more attractive, such as improving the taxation treatment of employee share schemes and limiting the requirement for disclosure documents given to employees to be made available to the public.

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