2013 Employee Share Scheme Reporting Deadline Approaching

Source: PwC  Companies with a presence or employees in Australia and who operate equity plans will have an Australian Employee Share Scheme (ESS) reporting obligation where a taxing event has occurred during the year. As part of the reporting requirement, companies must provide employees with an ESS statement by July 14, 2013 and provide the Australian Tax Office (ATO) with an ESS annual report by August 14, 2013. 

Source Deductions, Reporting on Stock Option Benefits

Source: HR Reporter  Administering stock options can be challenging for payroll, particularly where the persons concerned are no longer employees and there are no other earnings from which to make source deductions.  These challenges increased after the related income tax source deduction requirements changed in 2010. Now that a couple of years have passed, it would be interesting to discover how compliant employers are with the new rules.

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New Ruling Potentially Removes Upfront Taxation on RSUs

Source: PwC  Historically, there was potential for Restricted Stock Units (RSUs) and other conditional awards to be subject to taxation at grant if the award was subject only to a continued employment condition. Guidance in the form of rulings suggested that there was risk of taxation at grant if the RSUs vested over a graded vesting schedule (e.g., 1/3 per year over 3 years) or vested earlier than 3 years from the date of grant. 

Employee Stock Option Norms: SEBI Extends Deadline to Year-end

Source: Business Line  The deadline for companies to align their Employee Stock Option Schemes (ESOP) and Employee Stock Purchase Schemes (ESOS) with SEBI regulations has been extended from June 30 to December 31.  SEBI has clarified that its circular on employee benefits would be applicable only in cases where the company has set up the trust/agency. It would also be applicable if the company has either direct/indirect control over the employee benefit scheme or has extended financial assistance to the scheme.

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Simpler Rules for Buying Back Shares From Employees and Other Small Shareholders

Source: CMS   As of 30 April 2013, it has become slightly easier for private companies to buy back their own shares, including shares held by employees.  At first sight, the new provisions are of particular interest to private equity-owned companies, especially those which require employees to give up shares when they leave employment. However, the limited scope of the new rules and the lack of change in tax treatment mean that, in practice, it is unlikely that buybacks of employee shares will become common in the near future.

Sutardja Decision Shows Employers How to Preserve Stock Option Flexibility in a 409A World

Source: Porter Wright   Many commentators were surprised by the recent federal court of claims decision to deny summary judgment in Sutardja v United States. Sutardja, which currently is headed for trial, involves the IRS assessing a public company executive with Code Section 409A penalties, including a 20% additional income tax plus interest, with respect to potentially discounted stock options. What's surprising isn't so much the court's decision, but that the IRS chose this particular fact pattern to assess Code Section 409A penalties. 

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