AHRI: Share and share alike

In May last year, the government unwittingly walked into a firestorm when it announced plans in its budget to axe tax breaks on employee share schemes for workers earning more than $60,000 a year. Under the previous rules, workers could opt to pay the tax on their shares upfront and get a $1,000 discount on their liability. Or they could defer paying tax until the shares were sold – and then pay tax on the gap between the market rate and the price they paid for them. Under the tax deferred plans, employees could put off paying tax on the shares for up to 10 years. The government’s agenda was simple: restore the budget to surplus. At the time, it claimed it was just closing a tax loophole. Finance minister Lindsay Tanner told the ABC’s AM program that the $60,000 cut off point was reasonable and that “the bulk of use of this particular arrangement was by people at the upper end of the income scale primarily focused on minimising their tax”.