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Transforming your ESS reporting capability

Transforming your ESS reporting capability

Mardi Heinrich, Daniel Hodgson, and Matt Masters discuss managing the increasing complexity of Employee Share Scheme reporting.


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The management of employee share schemes (ESS) can be incredibly complex. The burden on in-house resources continues to rise due to multiple legislative changes from 2009 to 2015, a more globally mobile workforce, and the increasing importance placed on employer reporting by the Australian Taxation Office (ATO).

In addition, the disclosure of ESS income in state payroll tax returns remains a key feature of significant audit activity, with certain revenue offices recently targeting the disclosure of payroll tax wages in connection with $1,000 ‘exempt’ plans.

Technology and automation is transforming organisations’ tax and reporting capabilities. It is important to ensure that your ESS reporting and related obligations are part of this transformation.

With no legislative change impacting FY18 ESS reporting obligations, and with many on-cycle ESS reportable events happening now, or about to happen, now is the time to look at your alternatives.

When looking for a solution that supports your business, it is important that you consider, among other things, the following:

  • How can you source data directly from your share plan administrators so the calculation of ESS income can be fully automated, including for internationally mobile participants?
  • Will it minimise the time required of in-house teams, reducing your costs and freeing up time for more valuable analysis?
  • Does it provide tax assurance of employee and ATO reporting, thereby minimising the risk of error?
  • Will it cater to scenarios where employees have terminated employment resulting in an ESS taxing point being brought forward ? and
  • Can it generate configurable reports that provide clarity to employees regarding their tax obligations, increasing participant engagement and reducing the time spent of your teams managing queries?

To the extent that there are expatriates within the business participating in deferred cash incentives, leveraging whatever technology solution is used for ESS reporting to also manage the cross-border tax reporting and withholding obligations for cash payments can add value by reducing risk and cost of compliance.

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