House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Small Business, the Hon Bruce Billson MP)

Chapter 3 - Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Improvements to the taxation of employee share schemes

3.1 This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

3.2 Schedule 1 to this Bill amends the Income Tax Assessment Act 1997 to improve the taxation of employee shares schemes by:

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reversing entities some of the changes made in 2009 to the taxing point for rights for employees of all corporate tax;

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introducing a further taxation concession for employees of certain small start-up companies; and

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supporting the Australian Taxation Office to work with industry to develop and approve safe harbour valuation methods and standardised documentation that will streamline the process of establishing and maintaining an employee share scheme.

3.3 These changes will improve the tax treatment of employee share schemes so as to facilitate better alignment of interests between employers and their employees, and to stimulate the growth of high technology start-ups in Australia by helping small unlisted companies be more competitive in the labour market.

Human rights implications

3.4 This Schedule does not engage any of the applicable rights or freedoms.

Conclusion

3.5 This Schedule is compatible with human rights as it does not raise any human rights issues.