A tax reform by the federal government will increase the scope of employers to issues employees with shares and stock options. Prior to 2009, employees receiving shares or stock options were able to defer paying tax, with many only paying CGT once they have disposed of the assets down the line. In order to increase budget revenue, the Labour government changed this arrangement, meaning that when an employee received shares, they incurred an immediate tax liability.
These restrictions meant that many startups often had to start paying employees higher salaries in order to retain talent. However, the benefits of startups being able to issues shares and stock options go beyond freeing up valuable cash flow. When employees have a stake in the future success of a startup commitment, motivation and engagement soar.
The federal government is considering a scheme modelled on a similar British approach, whereby the option to defer tax is limited to smaller companies. The Treasury is currently investigating what size thresholds will boost productivity without creating a problematic shortfall in budget revenue.