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2019 employee share scheme reporting – are you ready?

2019 employee share scheme reporting

Daniel Hodgson & Matt Masters discuss annual reporting obligations regarding employee share schemes.

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Employers will be aware that they have an annual obligation to report Australian taxable events that occur in relation to employee share schemes (ESS) with the first ESS reporting for the Australian tax year ending 30 June 2019 being the ESS Statement due to employees on or before 14 July 2019. The continual changes to the laws relating to ESS over the last decade has increased the compliance burden and the risk of making mistakes. For those employers now turning their attention to this requirement and finding they are grappling with the various tax regimes applying to ESS or getting on top of things we have the answer.

Why ESS reporting matters

This is an employer reporting obligation so companies should have appropriate systems and procedures in place to meet their ESS-related compliance obligations. Penalties can be imposed on an employer if the submissions are not made on time and any delays or errors in reporting will also have a negative impact on employee engagement, as the information forms a critical part of their tax return obligations.

What makes ESS reporting difficult?

ESS reporting is a complex, point in time obligation, requiring specialist tax knowledge. Consider the following aspects relating to ESS:

  • multiple legislative changes over recent years means that awards can be taxed under any one of three different tax regimes that run in parallel, and that any single employee may hold a combination of awards, that collectively, are taxed under all three regimes;
  • Australia has unique tax events which, especially for share schemes administered by a foreign parent, are often not tracked e.g., termination of employment, or if shares are sold within 30 days of the original deferred taxing point;
  • the first reporting obligations fall just 2 weeks after the close of the tax year;
  • reporting to the ATO must meet specified electronic standard business reporting requirements, requiring a commercial software solution; and
  • International assignments impact reporting obligations.

How we can help

KPMG’s Employee Share Scheme Reporter is an industry-leading solution that automates the entire reporting process, sourcing data directly from share plan administrators, to:
  • Minimise the time required of in-house teams;
  • Reduce the risk of error;
  • Provide the assurance of KPMG Tax sign-off on employee and ATO reporting; and
  • Generate reports that provide clarity to employees regarding their tax obligations.

Employers requiring assistance with their 2019 ESS reporting obligations, or who would like further information regarding our software are invited to contact their KPMG representative.

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