It had been expected that the Budget might announce long-awaited changes to essentially simplify Div 83A ITAA 1997 governing the application of the employee share scheme (ESS) rules, however, the Budget was silent on this.

The rules, which have operated since 1 July 2009, have been repeatedly criticised as too complex and in need of simplifying and that in their current form, were an effective disincentive for companies to offer their employees share plans.  Calls have also often been made for the rules to be changed to encourage start-ups.

The pressure for change is obviously there, and it is understood the Government is essentially receptive to the need for change. While the process of framing the Budget was no doubt a difficult one, it was nonetheless anticipated that the opportunity might be taken to make some announcement on the ESS rules. It would have been welcome.

[WTB 20, 13/5/14]