If your organisation has issued shares or securities to employees, either this year or in prior years, you may be required to report this information to the Australian Taxation Office (ATO). Under the Employee Share Scheme (ESS) rules, employers must provide detailed information about their employees’ ESS interests to both the ATO and the employees themselves. This reporting forms a vital role in employee’s annual tax returns, promoting transparency and accurate tax calculations.
Company records should be clear as to whether any ESS issues have triggered a taxing event for the employee. If a taxing event has been triggered, the key ESS Reporting Deadlines for 2025 are:
Whether you are preparing for your first ESS reporting cycle or managing ongoing obligations, it is essential that these statements are provided on time. As best practice, an annual report should be lodged with the ATO even if the discount on ESS interests is $1,000 or less as late filing can cause issues both with the ATO but also from the employees’ perspective in complying with their own tax obligations. The ATO do data match publicly available information (including annual reports) to that lodged by a company.
What Needs to Be Reported?
Before you can meet your ESS reporting obligations, it is important to understand if a taxing event has occurred and if so, then what information must be reported.
As a broad comment, an employee participating in an ESS will include in their assessable income, the ‘discount’ (its market value less what the employee paid) on those ESS interests once a taxing point has occurred.
ESS interests may either be taxed up front on issue or can access concessional tax deferred treatment – meaning the discount on those ESS interests will trigger at some point in the future. This is why it is important for robust record keeping relating to ESS interests on issue.
Each year the company must assess whether a taxing point has occurred, both for ESS interests granted during the year, or whether a taxing point on prior year ESS interests occurred in the current year for those which qualified to be tax deferred. It is not the purpose of this article to step through the complexities of taxing points and something which can be addressed by the Moore team if unsure.
For employees participating in an ESS, the following details must be included in both the ESS statements provided to employees and the annual report submitted to the ATO:
Reporting for Employees:
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Discounts received on ESS interests acquired under taxed upfront schemes or tax-deferred schemes which had a taxing point during the year
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Total Tax File Number (TFN) amounts withheld from discounts – if any
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Specific data for employees eligible for the start-up concession, including the number of ESS interests acquired, market value, acquisition price and exercise price (if applicable)
Reporting for the ATO:
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Plan identifiers and acquisition dates for each ESS interest
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The discount on taxed up front or deferred plans, including details on number of ESS interests and TFN amounts withheld from discounts
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Additional details for start-up concession schemes and taxed upfront schemes, including the number of ESS interests and their respective discounts
How we can help
We understand that navigating ESS reporting can be complex, but Moore Australia is here to support your organisation to meet your tax obligations on time. Our expert tax team can assist with a variety of requirements including:
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Reviewing ESS plan terms to determine if ESS interests are taxed upfront, tax deferred and whether a taxing point has occurred.
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Preparing or reviewing required statements and reporting documents
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Conducting critical valuations to accurately calculate and report discounts
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Submitting ESS annual reports on your behalf through the tax agent portal, provided the required declarations are authorised
Recent Legislative Changes
Tax laws around ESS are continually evolving. Recent updates include the removal of employment cessation as a deferred taxing point and an increase to the significant ownership test threshold. Moore Australia can help you understand how these changes might impact your current or proposed ESS plans.
Need More Time?
If you encounter exceptional or unforeseen circumstances that may impact your ability to lodge your ESS annual report by the due date, Moore Australia can assist in submitting an extension request to the ATO. However, you and your company must be aware that once an extension is granted, no further extensions will be available to you within the current reporting year. To ensure all deadlines and details are prepared on time, we also suggest employers keep open and timely lines of communication with these employees, particularly if there will be any delays in the reporting process.
Get in Touch
Don’t leave your ESS compliance to chance. Contact us today to ensure your ESS reporting is accurate, timely and fully compliant before submitting it to the ATO. Together, we’ll ensure your business and employees can maximise the benefits of ESS without the stress of tax complications.