Employee share crackdown worries Libs

A budget proposal to close tax loopholes for employee share plans could destroy the
schemes and affect millions of Australians, the federal opposition leader says.
The federal government announced changes in last week's budget that will prevent
high income earners from dodging tax payments on company shares, while putting an
extra $200 million into government coffers.
Employees taking part in the share schemes currently pay tax on any discount on the
full value of a share or option from their employer.
Some taxpayers, the government says, are able to avoid paying tax on the discount by
using "the deferral method of assessment and then not declaring the discount at the
appropriate time".
The new measure would stop the deferral and ensure that shares are assessed and
taxed in the year they are acquired.
It will also limit a $1,000 concession - previously given to employees in a
qualifying share scheme - to only those with a taxable income of less than $60,000.
Opposition Leader Malcolm Turnbull says the proposal is an assault on aspirational
Australians who want to own a piece of the companies they work for.
"The Rudd government appears to be trying to eliminate some tax loopholes in respect
of the use of employee share options," Mr Turnbull told the Queensland Media Club in
Brisbane on Monday.
"The measure they've announced is having the effect of effectively shutting down
just about every employee's share scheme and employee option scheme around the
country.
"Millions of Australians are likely to be affected."
Mr Turnbull said it was highly desirable for employees to have a stake in their own
companies, but nobody would want to pay tax on a benefit that was completely
"contingent".
"I think it may prove to be one of the most controversial and unpopular and
unpalatable elements in the budget," he said.
Finance Minister Lindsay Tanner told Network Ten on Sunday that the scheme had been
used "primarily as a tax-avoidance mechanism".
People were "ripping off taxpayers" by having a lower rate of tax on large portions
of their earnings.
"(The scheme has been used) as a way of people being able to pay a lower rate of tax
on what is simply their ordinary earnings," Mr Tanner said.
"It effectively was an anomaly...creating an unfair advantage for some people and
overwhelming higher income earners."