August 25, 2021

Australian Legislative Committee Urges Consideration of Employee Ownership Trusts

NCEO founder and senior staff member

Employee ownership in Australia is limited primarily to employee stock purchase plans and employee equity grant programs such as stock options, although some advisors have figured out ways to create something that looks somewhat like a U.S. ESOP. A new report from the House of Representatives Standing Committee on Tax and Revenue titled Owning a Share of Your Work: Tax Treatment of Employee Share Schemes discusses the state of stock plans in the country.

The report notes that Australia's use of employee stock plans remains lower than that of the U.S. and UK. Despite the Australian Treasury's objection that it is hard to compare tax systems across countries, the committee felt that it is useful to examine the U.S. and UK tax and regulatory systems, which are more conducive to employee ownership. The report unfortunately mischaracterizes ESOPs in the U.S. as stock options and employee stock purchase plans (and incorrectly describes them in the process), even while quoting data from the NCEO on the prevalence of ESOPs. The report does note the UK use of employee ownership trusts. Among other recommendations, the report “recommends that the Productivity Commission investigate how the use of employee ownership trusts can be facilitated and encouraged" and also that the Committee explore the use of stock plans in other countries.