Rewarding SME employees: alternatives and considerations – 2017 SA Tax Intensive

Ben Turner FTI
Private companies are increasingly turning to equity incentive plans in lieu of cash remuneration to attract and retain key employees.

These incentive plans can often be complex to implement and operate, with legal, accounting and administrative implications that need to be considered.

Ranging from the ‘vanilla’ to premium-priced and purchased-option schemes, each comes with a unique set of benefits and potential traps.

Division 7A continues to cause headaches for advisers, and fringe benefits tax consequences are always lurking in the background. There are also a number of recent start-up concessions to be aware of.

At the upcoming South Australian Tax Intensive, EY will facilitate a workshop on ‘Rewarding your employees: what are the alternatives and considerations from an SME perspective?' It will deep-dive into some of the common and not-so-common issues that SME businesses and their advisers may face.

Led by Ben Turner FTI, a Senior Manager in EY’s People Advisory Services team, this session will be facilitated by Leanne Thomas CTA, a Director of EY’s Private Client Services, Craig Whiteman CTA, lead tax Partner with EY in Adelaide, and Claire van Malland, a Senior Manager in EY’s Private Client Services team.

The session will provide practical guidance to help you navigate through the issues and better understand whether an equity plan may be useful for your client or your client’s company.

We spoke with Ben about what to expect on the day.

“The employment landscape is changing. Employers who think smarter about what motivates their employees and can align this with their business growth are much better placed for greater success," Ben told us.

"One way of doing this is through offering employees an equity interest in the business, but the area is somewhat complex. Therefore, being aware of the various tools and options available and their implications is an essential first step. This session plans to provide that base-level understanding, so employers (and employees) can demystify this area and consider whether an equity plan is appropriate for their organisation.”

Asked about some of the blind spots for advisers, Ben said: “Whilst employers and employees may have a vague understanding of employee equity plans, as with all tax, the devil is in the detail. Choosing the wrong structure may mean that the organisation is burdened with additional costs from compliance that doesn’t deliver the desired motivation from employees to drive growth, or doesn't help to retain key employees.”

“Tax advisers will come away with a summary framework that can assist in informing clients of the options available. Businesses that have previously not seriously considered implementing a remuneration plan will be better placed to determine whether an equity plan is likely to benefit them.”, he continued.

Affiliated with The Tax Institute for the last 10 years, initially as co-chair of tax updates and as a researcher for a technical paper, in recent years Ben has found himself engaging in more speaking roles, presenting on various specialty areas.

Working in tax-related roles his entire professional career, Ben started out as a graduate at EY in 2006 before spending a couple of years as a commercial lawyer, ultimately finding himself back at EY where he has focused on assisting clients resolve their employment tax issues.

Ben and his EY colleagues will be joined by some of South Australia’s other preeminent tax advisers and emerging leaders at this year’s Tax Intensive, to be held at the Adelaide Oval on 19-20 October 2017.

Other sessions will include ‘Demystifying Div 7A - issues arising from common structures and strategies to deal with them’, led by Nicole Peterson CTA (PKF Adelaide) and ‘Super reforms and estate planning’, led by Matthew Andruchowycz CTA (DMAW Lawyers).

You can find out more about these sessions and the rest of the program, including the Members’ Annual Dinner, on our website.

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