Potential double taxation of employee share trusts has been eliminated which will reduce administration costs for employers according to Deloitte Tax Partner Rob Basker.

“An unintended consequence of the wording of the current legislation (which the government has now resolved) was that at the point where the share was transferred from the trustee to the employee, both may have a tax liability resulting in double taxation.

“The government has resolved a complex double tax issue by removing the tax burden on the trustee,” Mr Basker said.

“Clarifying the anomaly will stream line the administration of share trusts and make them more attractive for employers to provide performance-based rewards to employees,” he says.

“Australian employers are increasingly utilising employee share trusts to administer the delivery of shares to their employees who participate in equity incentive plans. This measure will encourage greater use of such share trust vehicles.