• Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    2010-11 supplementary employer reporting requirements for employee share schemes - reduced ESS statements

    Reduced reporting for employee share schemes

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    There are instances where you don't need to lodge an employee share scheme (ESS) annual report with us, but may still need to provide your employees with information to help them complete their tax return.

    To do this you can provide your employee with a reduced ESS statement, which is a simplified version of the full ESS statement.

    You may issue a reduced ESS statement to your employees regarding ESS interests (that is shares, stapled securities or rights to acquire them) provided to them (or their associates) if:

    • certain conditions are met, and
    • specific wording is used on the reduced statement (which will vary according to which condition applies).
    Further information

    You will need to read this information in conjunction with the following:

    End of further information

    Conditions for issuing a reduced ESS statement

    Refer to the following table to find out what your reporting requirements are and if you can give your employee a reduced ESS statement.

    If the ESS interests were acquired …

    and …

    then you …

    before 1 July 2009

    the cessation time for those ESS interests occurred on or after 1 July 2009

    are required to lodge an ESS annual report with us and provide your employees with an ESS Statement.

    You cannot give your employee a reduced ESS statement.

    were under a scheme where the $1,000 exemption applied

    and

    the discount at acquisition was less than or equal to $1,000

    and

    you believe your employee was eligible for the $1,000 exemption

    don't need to report to us.

    You must give your employee a reduced ESS statement - see Condition 1.

    after 30 June 2009

    they were acquired through a tax-deferred scheme with no taxing point during 2010-11

    don't need to report to us or your employee.

    You can choose to give your employee a reduced ESS statement - see Condition 2.

    they were acquired through a taxed upfront scheme eligible for reduction

    are required to lodge an ESS annual report with us and provide your employees with an ESS Statement.

    You cannot give your employee a reduced ESS statement.

    Refer to ESS interests acquired after 30 June 2009 through a taxed upfront scheme eligible for reduction.

    How to issue a reduced ESS statement

    If you meet the conditions for issuing a reduced ESS statement to your employee you will need to use specific authorised wording which will be different depending on the circumstances.

    Further information

    Select one of the following for more information about how to prepare a reduced ESS statement for your employees:

    End of further information

    Condition 1

    ESS interests acquired before 1 July 2009 where the $1,000 exemption applies

    You are not required to report potential deferred taxing points that could arise for ESS interests, where:

    • your employee acquired them before 1 July 2009 under a scheme where the $1,000 exemption applied
    • the discount at acquisition was less than or equal to $1,000, and
    • you believe the employee was eligible for the $1,000 exemption.

    You are still required to give your employee an ESS statement, this may be a reduced ESS statement using the following authorised wording.

    Authorised wording for reduced ESS statements

    Give your employee a document with the following authorised wording:

    "During 2010-11, you had a potential 'deferred taxing point' for shares or rights that you acquired under an employee share scheme before 1 July 2009.

    The Australian Taxation Office advises us that you do not need to report this information on your 2011 tax return.

    For more information on the taxation treatment of employee share schemes, see www.ato.gov.au/employeeshareschemes"

    Example 1

    Metropolis Ltd gives their employee Quinn 500 shares on 11 January 2008 under a scheme where the $1,000 exemption applies. The discount at acquisition is $700. Quinn is eligible for the $1,000 exemption.

    On 10 January 2011 there is a potential deferred taxing point for these shares. As the discount at acquisition was less than $1,000, and Quinn was eligible for the $1,000 exemption, Metropolis Ltd is not required to report any information to the ATO.

    Metropolis Ltd gives Quinn a reduced ESS statement before 14 July 2011, as follows:

    "During 2010-11 you had a potential 'deferred taxing point' for shares or rights that you acquired under an employee share scheme before 1 July 2009.

    The Australian Taxation Office advises us that you do not need to report this information on your 2011 tax return.

    For more information on the taxation treatment of employee share schemes, see www.ato.gov.au/employeeshareschemes"

    End of example

    Condition 2

    ESS interests acquired after 30 June 2009 through a tax-deferred scheme with no taxing point during 2010-11

    You are required to report ESS interests acquired under a tax-deferred scheme only in the financial year when the deferred taxing point happens.

    You do not need to report any information to us, or your employee, if:

    • your employee acquired ESS interests under a tax-deferred scheme during 2010-11, and
    • the deferred taxing point did not occur during 2010-11.

    Authorised wording for reduced ESS statements

    If you choose to provide your employee with a reduced ESS statement then you must use the following authorised wording:

    "During 2010-11, 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 2011 tax return as a taxing point did not occur in 2010-11.

    When a taxing point does arise in a future financial year, you will receive an ESS statement to help you complete your tax return for that year."

    Example 2

    On 5 February 2011, Happy Snapz Ltd gives their employee Olivia 200 shares under a tax-deferred scheme. There is no deferred taxing point for these shares during 2010-11. Happy Snapz Ltd is not required to report any information to the ATO.

    Happy Snapz Ltd gives Olivia a document before 14 July 2011, as follows:

    "During 2010-11, 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 2011 tax return as a taxing point did not occur in 2010-11.

    When a taxing point does arise in a future financial year, you will receive an ESS statement to help you complete your tax return for that year."

    During 2012-13, a deferred taxing point happens to Olivia's shares. Happy Snapz Ltd gives information about the ESS interests and the discount at the deferred taxing point to Olivia in an ESS statement by 14 July 2013 and to the ATO in an ESS annual report by 14 August 2013.

    End of example

    ESS interests acquired after 30 June 2009 through a taxed-upfront scheme eligible for reduction

    Attention

    From 2010-11 you must not issue a reduced ESS statement for any ESS interests acquired after 30 June 2009 through a taxed-upfront scheme.

    For 2009-10 you were able to issue a reduced ESS statement where your employee had received ESS interests in a taxed-upfront scheme that was eligible for a $1,000 reduction, and:

    • the discount was less than or equal to $1,000
    • there had been no tax file number withholding
    • the sum of the employee's salary and wages, allowances, reportable fringe benefits amount and reportable employer superannuation contributions was less than or equal to $150,000.
    End of attention

    You are required to lodge an ESS annual report with us and provide your employees with an ESS Statement.

    Further information

    For further information, refer to ESS - guide for employers.

    For an explanation of any of the terms used in this document, refer to Terms you need to understand.

    End of further information
      Last modified: 24 Oct 2011QC 27291