TAX NEWS - 2010

Australia tax: Employee share plans - Employee statements and employer annual report

The Australian Taxation Office (ATO) has released the final versions of the employee share plan reporting forms and the employee share plan annual report guide for the 2009-10 year.


Overview

There are three broad types of employee share plan statements:
- Reduced employee share plan statement in limited circumstances
- Original employee share plan statement for the 2009-10 year and onwards
- Amended employee share plan statement for the 2009-10 year and onwards.

An employee share plan annual report and guide have also been published for providers.

The provider of an employee share plan interest will be required to give a statement (or a reduced statement where applicable) to the employee by 14 July 2010, and an annual report to the Australian Taxation Office (ATO) by 14 August 2010. The annual report can be lodged electronically or on paper. If you believe you will need to request an extension of time to meet the requirements, please do so as soon as possible although there is no automatic right of extension. The provider of the employee share plan interest is the issuer company and not necessarily the recipient's employer.


Reduced reporting

Reduced reporting is satisfied by way of a reduced statement which contains specific wording to be given to the employee by the provider, without use of a particular form. In some cases of reduced reporting, the provider must still give an annual report to the Australian Taxation Office (ATO).

Reduced reporting for employee share plan interests acquired on or after July 1, 2009 through a tax deferred scheme with no taxing point during 2009-10 – The provider should, but is not required to, give the employee a reduced statement utilizing the following wording when these interests are granted:

- "During 2009-10, you acquired employee share scheme interests in a tax-deferred employee share scheme. You don't need to report information about these interests on your 2010 tax return as a taxing point did not occur in 2009-10.
- When a taxing point does arise in a future financial year, you will receive an Employee share scheme statement to help you complete your tax return for that year."

The provider is required to give an annual report to the Australian Taxation Office (ATO) for these interests only in the financial year during which the deferred taxing point occurs.

For reduced reporting requirements where the AUD 1,000 exemption applies, please contact a Deloitte team member for further advice.


Original employee share plan statement

In all other cases, a provider who grants interests to an employee must, at the end of the year, and in certain cases at the end of a later year, give a statement to the employee.


Amended employee share plan statement

If the provider becomes aware of any information that has materially changed or has been omitted from the employee share plan statement after they have provided the statement, the provider must provide the employee with the corrected information by way of an amended statement within 30 days of discovering the change or omission.


Employee share plan annual report

Providers are (unless exempted, see above) required to provide an annual report to the Australian Taxation Office (ATO) for the 2009-10 year onwards.

The information to be disclosed on the annual report includes:

- Details of the employer and each participating employee who has an employee share plan event occurring during the year – this includes the employee's name, address, date of birth and tax file number (TFN) or Australian business number (ABN);
- Plan identifier, which is a reference that identifies a particular plan within other plans operated by the same provider;
- Plan date, which is the date on which a taxing point occurs to an interest acquired by an employee;
- Amount of income assessable and the number of interests acquired during the year for taxed up-front plans and/or tax-deferred plans;
- Any TFN withholding tax paid where the employee did not provide a TFN or ABN.

If the employee receives interests from more than one plan, the provider will need to complete a separate section in the annual report for each plan in which the employee participates.

Providers may authorize an organization to supply the information on their behalf. It is, however, ultimately the responsibility of the provider (and not the Australian employer if that company is not the provider) to ensure the annual report is completed correctly and lodged with the Australian Taxation Office (ATO) by the due date.

If the provider becomes aware of any information that has materially changed or has been omitted from the statement after providing the annual report, the provider must provide the Australian Taxation Office (ATO) with the corrected information by lodging a new annual report within 30 days, and indicating that the annual report is an amended version.


Other considerations

- When determining and reporting the discount at the deferred taxing point, the provider must take account of the 30-day rule (where an individual sells the underlying stock within 30 days of the taxable event) if the provider is, or could reasonably be expected to be, aware that the interest has been disposed of.
- For shares provided to an employee through a trust, it is the provider, not the trustee, which is required to provide a statement to all employees who have acquired shares through the trust. The provider is not required to provide a statement to the trustee of the share trust.
- Employers should be aware of the transitional rules, as the reporting obligations may apply to interests acquired before July 1, 2009.


Action

- Companies should ensure that their processes to track and record all transactions for reporting purposes will meet the ATO's reporting requirements for the 2009-10 year onwards.
- Companies should ensure that their in-house resources (or their agent) have collated all relevant information for reporting, and are ready to populate and then deliver the statements by 14 July 2010, and the annual report by 14 August 2010.
- Companies should consider contacting the Australian Taxation Office (ATO) if they are having trouble complying with the reporting deadlines for the 2009- 2010 reporting year.