Tax and Governance
As noted in our 2022 EPS Insights publication, significant changes to the Employee Share Scheme (ESS) legislation have been implemented. The key changes to the ESS regime are:
- Cessation of employment has been removed as a taxing event from 1 July 2022
- New ESS rules came into effect on 1 October 2022 with ESS provision regulated under Division 1A of Part 7.12 of the
Corporations Act
- After consultation on 20 December 2022 changes were made to the new ESS provisions to address some unintended discrepancy between the relief available under the Class order and the new ESS regime.
- The ESS regime is intended to replace ASIC’s existing relief for employee incentive schemes in Class Order [CO 14/1000] Employee Incentive Schemes: Listed bodies and Class Order [CO 14/1001] Employee Incentive Schemes: Unlisted bodies. Please note that from 1 March 2023 entities will be unable to make new offers under these class orders.
What do companies need to do to implement the above changes?
| ESS reporting |
Make sure employees terminating post 1 July 2022 are only reported once their shares become available and there are no further trading restrictions. |
| New offers |
Update the Plan rules to reference the new ESS provisions. |
| Plan exemptions |
Update all the documents that refer to Class order 14/1000 or 14/1001 to Division 1 A of Part 7.12 of the Corporations Act. |
ASX Lodgement
Please note, all listed companies are required to lodge Equity Plan issuances, cancellations, and changes with the ASX. The announcement timings are within 5 Days for KMPs Issuance or within 10 Days of the end of quarter for Non KMP.
| Announcement |
For |
| 2A |
New share issuance under the equity plan. E.g. Shares issued to the employee share trust |
| 3H |
Notification of Cessation of unquoted Equity Plan Securities |
| 3H |
Notification of Cessation of unquoted Equity Plan Securities |