Employee share scheme (ESS)

This page provides links and information for software developer (SwD) consultation in regards to Employee share schemes (ESS).

Summary

In 2015-16, the government made a number of changes to existing ESS rules and also introduced a new concession that applies to employees of start-up companies. 

The main changes to existing rules are:

  • the deferred taxing point for ESS interests in tax-deferred schemes
  • the test for significant ownership or voting rights limitations
  • a tax refund is possible where an employee acquires rights but does not exercise them.

The new start-up concession is the:

  • discount provided for eligible ESS interests will not be taxed under the ESS rules as long as certain conditions have been met.
  • subsequent gains on the disposal of the rights or shares will still be taxed under the capital gains tax rules. However, the period of ownership of a share acquired on exercise of a right starts when the right is acquired.

We have undertaken large system changes to improve the management of ESS data.  This has resulted in changes to the channels through which the ESS Annual Report can be lodged.  For reports from 2016 financial year onwards, paper and bulk load excel spreadsheets will no longer be accepted. For electronic lodgments:

  • from 2016 financial year onwards, V2.0 of the Employee share scheme electronic reporting specifications is to be used
  • for 2015 and prior years reporting (originals or amendments), V1.0.1 of the Employee share scheme electronic reporting specifications is to be used.

See Employee share schemes for more information.

Status

The legislation relating to the above changes received Royal Assent on 30 June 2015. 

News

11 July 2016 – ESS lodgment issue resolved

The issue that prevented us processing 2016 ESS annual reports via the file transfer facility is now resolved. We will continue to monitor our systems to ensure the problem does not reoccur.

Employees (of ESS companies) wanting to lodge their tax returns will have their ESS pre-fill data available approximately 2-3 days after the lodgment of the annual report.

Thank you for your patience. If you have any concerns, email us at ATO-ESS@ato.gov.au.

14 June 2016

As a result of changes to permissions in Access Manager being deployed this tax time, we are communicating with clients who have previously lodged an Employee share scheme (ESS) report through the portal file transfer function.

Our communication with clients will commence from Monday 13 June 2016. Our communications will initially be via email to all identified ESS reporters. At the end of June we will publish information on Employee share scheme news and updates.

The key messages are:

  • Providers reporting through the ATO portals need to ensure they have the correct permissions set up in Access Manager to allow them to prepare and lodge ESS reports.
  • An update to Access Manager permissions for ESS reports will be deployed after 26 June 2016.
  • Access permissions can only be updated in Access Manager by AUSkey Administrators.
  • Step-by-step instructions about how to update the permissions have been provided.

Clients are referred to Access Manager to add the necessary permissions and are provided with a link to Employee share scheme news and updates for more information about lodging ESS reports.

For more ESS information see ESS news and updates.

Links and documents

Specifications for 2016 reporting and subsequent years

Test scenarios

Product register – If you are developing an ESS product why not register it here?

Contact information

Feedback can be sent to SIPO@ato.gov.au.