In a joint media release on 14 October 2014, the Federal Government responded to lobbying by start-up companies by proposing a number of changes to the ESS rules, including:

• Special concessions targeted at shares issued by eligible start-up companies – those with turnover not exceeding $50m, unlisted, and incorporated for less than 10 years;
• Employees of eligible start-up companies can potentially defer tax until the underlying shares are sold, with the entire amount taxed under the CGT rules;
• Employees who are issued with options under a deferred tax scheme will be able to defer the tax until the options are exercised (rather than when the options are received); and
• The maximum time period for deferring the taxing point will be extended from 7 years to 15

While there is no draft legislation at this stage, the new rules are intended to shares and options provided from 1 July 2015 onwards.