ESOPs: New Government Backing, But What’s Next?

By CPD

Australia is at least 15 years behind other OECD countries in establishing employee share option plans.

The newly established Employee Share Ownership Development Unit in the Dept of Employment and Workplace Relations (DEWR). The senior consultant to the government asked Workplace Intelligence that he not be named also advises listed and private companies on setting up ESOPs. He says that private companies are actively being put off setting up ESOPs by cost and complexity problems. If these problems are to be satisfactorily addresses, he says, there is a need for radical changes to tax and legislation for this sector. The union movement got involved in the ESOP idea in the 1990s, producing the Employee Share Ownership Plans - Handle With Care. This report highlighted good and bad examples of plans, condemning the practices of using ESOPs, which were "structured essentially to avoid taxation liabilities", or loan-back, or for income splitting and "profit-washing."

(CPD Workplace Intelligence. August 2003)