31 Mar 2016

Changes to Employee Share Scheme Reporting in 2016

by Mark Friezer, Natalie Hickman

Australian listed companies that report through the Australian Share Registry should not be affected, but others are likely to find the changes to be burdensome.

Companies that provide Employee Share Schemes (ESS) to their employees will need to take urgent action in ensuring their ESS reporting is prepared in a manner that will be compatible with the new methods of lodgement with the Australian Taxation Office (ATO), due on 14 August 2016. This is because the ATO has announced that the channels available for employers for lodging an ESS Annual Report have changed from the 2016 financial year onwards.

The ATO has also announced certain changes to the information to be reported relevant to internationally mobile employees and to the new start-up concession.

New ESS Annual Report lodgements

From the year ending 30 June 2016 onwards, paper lodgements or lodgements using a Bulk Load Excel Spreadsheet (BLES) will no longer be accepted. Rather, employers/providers will only be able to lodge ESS Annual Reports in the following two ways:

1.  For employers reporting no more than 50 employees (the ATO have recently increased this number from 20 employees): a new ESS Online Form (which has not yet been made available but which we understand will be available from July 2016). The form can be lodged via the ATO Business Portal or ATO Tax Agent Portal, using a current AUSKey. This online form will not be available to overseas reporters without an Australian Business Number (ABN).

2.  Online filing using either purchased or in-house developed software which meets the ATO's ESS Electronic Reporting Specifications.

The ATO is expected to release updated guidance in the next couple of weeks to confirm and provide further information on the abovementioned lodgement methods.

Consequently, for companies (particularly foreign companies) that previously lodged a fairly simple report using the traditional paper format or BLES, the changes are likely to be burdensome as they will now need to manually input data into an online form, work through software compatibility issues or engage an Australian agent to lodge the report on their behalf. Australian listed companies that report through the Australian Share Registry should not be affected by these changes.

When reporting ESS amendments for the 2015 financial year and prior years, however, previous channels for reporting (ie. paper form, BLES or ESS Electronic Reporting Specifications) may continue to be used.

Reporting changes for internationally mobile employees

From the year ending 30 June 2016 onwards, employers reporting on internationally mobile employees will need to indicate whether the discount amount reported is the gross amount or the apportioned amount (that is, the Australian-sourced portion). The ATO will now also give companies the option to report the assignment start and end dates for overseas employment (for outbound employees).

These changes show that the ATO is more closely monitoring international assignments and it will becoming increasingly important for employers to have the correct information and calculations for their internationally mobile employees.

Reporting for start-up concession

For reporting companies that meet the new "start-up company" definition (relevant for the 2016 financial year onwards), information will been to be reported relating to the shares and options issued under the new concession. Further information on these changes will be released by the ATO in the coming months.

Reporting due dates

The lodgement dates for the 2016 financial year remain unchanged, with ESS statements due to employees by 14 July 2016 and ESS Annual Reports due 14 August 2016. The impact of the abovementioned changes will need to be considered to ensure that employers comply with their 2016 ESS obligations on time.


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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.