Incentivising Employees by Landau Ingrid;O'Connell Ann;Ramsay Ian; & Ann O’Connell & Ian Ramsay

Author:Landau, Ingrid;O'Connell, Ann;Ramsay, Ian; & Ann O’Connell & Ian Ramsay
Language: eng
Format: epub
Publisher: Melbourne University Publishing

The $1000 tax exemption

The $1000 tax exemption available under both ITAA 1936 Div 13A and ITAA 1997 Div 83A has been criticised for being too low. According to Price, for example, it ‘equates to the bare minimum of employee ownership’.97 In submissions to the Shared Endeavours inquiry, a number of companies and accountancy firms argued that the threshold was too easily exceeded, particularly where employees are given the opportunity to participate in both share and option plans.98 The Australian Employee Ownership Association (AEOA) argued that the effect of the $1000 threshold was to encourage wide but not deep employee shareholding. In its submission to the Shared Endeavours inquiry, KPMG presented results from its survey, which found that 35 per cent of respondents stated that they would introduce an employee share scheme if the tax exemption was increased to $2000 per employee per year.99 Submissions to the inquiry also argued that the exemption should be indexed. These arguments were rejected by the Treasurer, who argued that the government had already doubled the exemption (from $500 to $1000) and that indexing the concession would be anomalous, given that neither personal income tax scales nor the income free threshold were indexed.100 The Shared Endeavours Majority Report recommended that the tax-exempt concession be increased, but conceded that it was difficult to specify an increased amount in the absence of Treasury estimates of the costs associated with any such reforms.101 No increase in the tax-exempt concession occurred with the insertion of Div 83A into the ITAA 1997 and in fact the concession was restricted to those earning less than $180 000.

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