Employers must disclose any shares, rights or options that they grant to employees as part of their financial reporting under new ruling from the Australian Taxation Office (ATO).
The announcement will give employers just two weeks to comply with the new regulations.
The ATO, which has only recently finalised the obligations, will fine those employers in breach of the rules, and is expected to raise 90 per cent of the $135 million the government had budgeted to save though the changes.
Graham Childs, principle director at Mastertek told HR Leader that the reporting requirements for Employee Share Schemes (ESS) should not be a surprise to industry or the professional advisers that support it.
“The new reporting requirements, whilst only recently finalised, have been coming for some time and at Mastertek we have been advising our clients to prepare for it since the first drafts were announced some months ago.
“At the same time we have worked with organisations like the Australian Employee Ownership Association (AEOA) who have been providing practical input to the ATO’s working party formed to work through the issues associated with the practical application of the new rules.
For many organisations the requirements, while potentially problematic in the first instance, will help to bolster and add further rigour to corporate governance practices in an area where limited information has been available to stakeholders outside of select executive groups.
Childs added that the negative implications of the legislation will be really felt in smaller businesses. “Start up businesses, where cash is tight and equity is used as an incentive to acquire talent and in relatively small ‘baby boomer owned’ organisations where the owners are seeking succession through employee ownership. This is the area that the government needs to examine the unintended consequences of this otherwise very appropriate legislation."