Deadlines for Australian Share Plan Reports for the Australian tax year ending June 30, 2025 are approaching:
- Employee Share Scheme (ESS) Statements must be distributed to employees by Monday, July 14, 2025, and
- ESS Annual Report must be filed with the Australian Tax Office (ATO) by Thursday, August 14, 2025.
Do I need to comply with the ESS reporting requirements?
You will be required to comply with the ESS reporting requirements if an ESS deferred taxing point (assuming the award qualified for tax deferral at the time of grant) has happened during the Australian tax year (i.e., between July 1, 2024 to June 30, 2025).
Generally, the ESS deferred taxing point will happen at the following times for the following common types of awards:
- Options – exercise or, if applicable, cessation of any genuine restrictions on disposal of the shares;
- Restricted Stock Units (RSUs) / conditional share awards – settlement of awards in shares or, if applicable, cessation of any genuine restrictions on disposal of the shares;
- ESPP – purchase of shares or, if applicable, cessation of any genuine restrictions on disposal of the shares
For all award types, if the shares are sold within 30 days of the original ESS deferred taxing point, the taxing point is further deferred to the date of sale of the shares. Any such sales need to be taken into account in the ESS reporting if the issuer is aware of the sale.
Payroll tax
We also wanted to remind you that the employer may have payroll tax obligations in relation to
ESS interests.
Payroll tax is a state or territory-based tax payable by the employer on taxable wages paid to employees working in that state or territory. The market value of an employee share or right, less any amount paid by the employee, is generally included in taxable wages either at the time of grant or, if not paid at grant, at exercise (options), settlement (RSUs) or purchase (ESPP). Payroll tax obligations are separate from the federal ESS reporting obligations described above.
We have assisted a number of clients recently in relation to investigations conducted by state or territory revenue authorities in relation to payroll tax and specifically in relation to payroll tax due on ESS interests.
Now is also a good time to check that the employer has been meeting its payroll tax obligations in relation to equity awards.
How we can help
As a reminder, non-Australian issuers need to engage an intermediary (e.g., a local subsidiary or a third-party agent) to lodge the ESS Annual Reports with ATO online. We can assist you with meeting the deadlines using our specially designed upload tool.
Our full-service support includes:
- Calculations of the taxable amount, including for mobile employees;
- Producing ESS Statements for distribution to employees;
- Producing the ATO ESS Annual Report and lodging with ATO;
- Preparing standard communication to employees explaining the ESS Statements; and
- Preparing an individual calculation spreadsheet for each employee.
Our fee will vary depending on the number of employees, types of awards and service required.
To obtain a fee proposal, please either contact your regular Compensation attorney or our Sydney colleague, Erica Kidston. If we have assisted you with your annual ESS reporting in the past, we will be in touch shortly to request the necessary information.
