Payroll tax amendments
Pay-roll Tax Act 1971
At present, an employer's the pay-roll tax liability arises when shares are granted. The amendments provide that from 1 July 2005 an employer may choose to pay tax either when the shares are granted or when they vest. Shares are considered to vest when any conditions applying to the grant of the shares, such as performance requirements, have been met, and the grant of the shares cannot be rescinded by the employer.
Other amendments provide that:
pay-roll tax remains payable if a grant of a share or option is withdrawn, cancelled or exchanged, in exchange for valuable consideration.
a refund of tax is payable where the grant of a share or option to an employee is rescinded by someone other than the employer.
The market value of shares or options for pay-roll tax purposes is to be determined in accordance with the specific provisions relating to their valuation, and not the general provisions relating to fringe benefits.
The amendments have effect as if they had commenced on 1 July 2005. Employers may also elect to apply the amendments in respect of their pay-roll tax liability for the years commencing 1 July 2003 and 1 July 2004.
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