On 14 October 2014, the Federal Government released its Industry Innovation and Competitiveness Agenda, which contained its long awaited Employee Share Scheme reforms.

The current Employee Share Scheme rules have proven very problematic for SME’s for a number of reasons, not the least being the size and timing of the taxation impact of any Scheme on the staff, most often at a time when there is no ability to actually sell any equity to help fund the associated taxation liability.

The Federal Government’s announcement is thin on detail at this early stage, with the supporting legislation still to be drafted through an industry consultation program, but what is clear is that the changes are scheduled to apply from 1 July 2015, and that the overall implication for SME’s will depend on whether the SME constitutes a “Start-up” or not.

Start-up Companies

The clear winners are private “start-up” companies which are defined as unlisted companies, incorporated for less than ten years and with an aggregate turnover of less than $50 million.

Companies that fit into this category are able to provide Option and Share schemes with no up-front taxation in the hands of the Employee, and tax levied on sale under the Capital Gains Tax regime. This is a significant departure from the current rules in allowing employees to access the growth in value of the shares on Capital Gains Tax account (and the potential CGT discount), rather than ordinary income tax, as well as ensuring the tax payable is timed with an actual sale, rather than vesting.

A number of conditions need to be met for the Scheme to qualify for this concession, including Share schemes being offered for no more than a 15% discount, Share Option schemes not being issued “in the money” and there being a minimum holding period of at least 3 years.

Non Start-up Companies

For all other Companies, unfortunately the reforms are not as substantial.

For Share Schemes, there appears to be no substantive change to how they will operate – with tax to be levied either on grant of the Shares or at a deferred time having regard primarily to whether there is a risk of forfeiture.

For Option Schemes, the Government has announced a roll back of the taxation rules to the pre 2009 position. This means that Schemes will continue to be categorised into “taxed up front” or “deferred tax” schemes with tax payable at the Employees ordinary income tax rate at the relevant point, as they are currently. The key difference however will be in respect to “deferred tax” schemes whereby tax will primarily be levied when the Option is exercised, rather than when the Options vests (or the risk of forfeiture lifts). This will afford greater control over the timing of the taxation in the hands of the Employee.

Moore Stephens response

The Start-up concession is a welcome announcement that provides some very compelling benefits, and any Company that is in the 7 to 9 years of age, which falls under the $50m turnover limit, should give serious regard to whether an Employee Share Scheme fits their strategic plan before the start-up window closes.

For all other Companies, we are disappointed that very little has been done to address some of the practical hurdles of the current rules. For SME’s considering an Employee Share Scheme, we envisage the planning process to remain much the same as it has over the past few years.

If you would like to discuss this article or any other matter, please do not hesitate to contact the authors or visit moorestephens.com.au

The new look Yaris hatch has now arrived at Lander Toyota.

Featuring an all new stylish exterior and packed with additional features including new touch screen audio display, seven SRS air bags, LED stop lamps and reversing camera* as standard across the range, the new look Yaris is small in size but big on features.

For more information, call 02 8884 4888 or visit www.landertoyota.com.au to book a test drive.

Land a better deal at Lander Toyota.

Director of the Department of Industry’s Entrepreneur’s Infrastructure Programme, Doron Ben-Meir, has been named one of ‘Australia’s 12 most influential people in tech’ by leading business news organisation, SmartCompany.

Social media can be daunting, but with some research and planning, you can use it to your business' advantage. With this in mind, business.gov.au has developed a Social Media Plan Template and Guide to help businesses navigate the social media landscape.

The R&D Tax Incentive Snapshot is a new mobile responsive website which provides clear and simple guidance around the programme to help smaller companies quickly identify whether their business is eligible for the R&D Tax Incentive. The R&D Tax Incentive Snapshot provides real life case studies relevant to specific industry sectors and guides businesses on how to register and seek further information.

The Australian Government will invest $188.5 million in Industry Growth Centres to pursue global excellence in areas of competitive strength.

A key part of the Government’s Industry Innovation and Competitiveness Agenda, the centres will help industry exploit new global markets and supply chains, invent and commercialise new products and services and generate new jobs.

The Minister for Industry will seek expressions of interest from business-led consortia to establish five nonprofit Industry Growth Centres in the following sectors:

·         food and agribusiness

·         mining equipment, technology and services

·         oil, gas and energy resources

·         medical technologies and pharmaceuticals

·         advanced manufacturing sectors.

Each of the five Centres will receive funding of up to $3.5 million per year. The Centres will be required to establish a plan to become self-sustaining after four years and the Government will look to establish further Centres based on the success of the programme.

Small business advisory service providers can now apply for funding of up to $200,000 per annum over three years to provide expert advice to small businesses under the Australian Small Business Advisory Services (ASBAS) Programme.

With spectacular views of the racecourse, Rosehill Gardens is the ideal location to host a Christmas party with a difference.

Whether you are planning a big or small celebration, we have the perfect space to accommodate your guests. 

Superbly located in the heart of Greater Sydney, Rosehill Gardens is surrounded by a range of hotels. The on-site train station and complimentary parking allows your guests to travel with ease. 

Get Christmas all wrapped up and let our award winning Events Team arrange everything, so all you have to do is enjoy the festivity of Christmas!

PR and Marketing firm Hugo Halliday is pulling up stakes from its Gladesville office and moving to Parramatta.

Managing Director of Hugo Halliday PR and Marketing Bill Pickering said the move is to keep pace with Sydney’s shifting business landscape.

“No longer is the Sydney CBD or nearby suburbs considered as the heart of our State’s capital – Parramatta took this title long ago,” Mr Pickering said.

“Businesses looking to prosper must consider making the move west to keep pace with where the action is in regards to connectivity and clients.”

Mr Pickering said Hugo Halliday is a diverse public relations and media and marketing company that works with clients seeking advocacy with all levels of Government, media training and exposure and community relations expertise.

He describes himself as a ‘corporate soldier’ ready to do battle with Government, Media and groups opposed to business interests to achieve desired outcomes.

A corporate soldier? A number of former Defence officers have joined forces with large businesses to add firepower to boardrooms to assist with realising corporate goals and aims. Hugo Halliday Public Relations and Marketing Pty Ltd is one company that enjoys the military experience of two of its members.

Mr Pickering is a former journalist and senior public affairs and media consultant who is at home wearing svelte suits or disrupted pattern camouflage uniforms. Bill is a former Regular Army Lieutenant Colonel and communications specialist who has been in some of the world’s hot spots working with the United Nations and the Australian Army. He has taken his war fighting skills to a different level by utilising them for corporations and businesses to achieve their goals and aims with Government, Media and the wider community.

Bill has led national media campaigns, international public affairs in Asia and Africa, dealt with major national crises and co-ordinated sensitive national and international public information strategies. He has held senior appointments in Federal and State Governments, in the Media, and more recently in communications and PR agencies. Bill has a Masters degree in Organisational Communication and a Bachelors degree in Journalism and Media.

Assisting Bill is Christopher Holcroft who is also a Media and corporate communications specialist; former journalist and senior public affairs and Media specialist. Christopher is an Army Reserve Lieutenant Colonel who is also just as happy to wear corporate suits or a camouflage uniform to get the job done.

He also brings a mix of corporate and military skills and leadership to the table to enable clients to achieve their goals. Christopher has led national media campaigns, international public affairs in Asia and the Middle East, dealt with major national crises and co-ordinated sensitive national and international public information strategies.

Christopher has held senior appointments in Federal, State and Local Governments, in the Media, and more recently in communications and PR agencies. Christopher has a Masters degree in Organisational Communication and a Bachelors degree in Journalism and Communication Technology. He has also written five books – three aimed at teenagers and two for adults.

Forming the rest of the operational team at Hugo Halliday is Nathaniel Smith whose expertise is Government advocacy and community relations and Jessica Craig, a graphic artist who helps brings life to company websites, brochures, newsletters and other media. Together they form part of the operational team at Hugo Halliday to help clients combat the jungle of Government lobbying; Media and community relations.

“If you need something urgent to be done or a crisis hits your organisation which corporate soldiers are you going to call? Hopefully someone with experience in an operations room working for multi-levels of governance and Media – that will be Hugo Halliday PR and Marketing,” Mr Pickering said.

“Some business leaders like to be called Captains of industry.  Step up the rank chain and call people who have actually served the country in uniform and know how to handle issues at senior levels.

“Keeping cool under fire is a military trait Hugo Halliday espouses in crisis communications along with good strategic and tactical planning.”

Mr Pickering said Hugo Halliday does not have former tank commanders who know how to drive tanks in paddocks and fields; infantry soldiers whose life revolved around fighting on battlefields or even naval warfare officers who can fire the big guns. Instead, Hugo Halliday has experts in fields you need to actually deploy in your boardrooms – Government advocacy experts; communications, Media, crisis management, public information campaign strategists and community relations experts.

He said Hugo Halliday brings to Parramatta a kitbag of corporate skills including consultative leadership and empowerment for businesses to solve their corporate issues and concerns through a mission and command approach. This allows business to set the parameters of the agreed mission or goal for their ventures and for Hugo Halliday to effect what is required to achieve the aims.