The TD2022/D2 provides guidance on when establishment and administration costs can be claimed and the ATO has advised businesses that if they provide an employee share scheme (ESS), they may be able to claim a deduction for the expenses incurred in establishing and administering an employee share trust (EST) that holds shares or rights for employees participating in the ESS.
Establishment expenses are those associated with creating an ESS, such as legal fees and stamp duty and these expenses aren’t deductible upfront because they’re capital in nature.
However, as the determination explains, establishment expenses may be claimed as a deduction over five years to the extent that the business carried on is for a taxable purpose.
Ongoing expenses associated with administering an ESS, such as brokerage fees, audit fees and bank charges, are deductible in the year they’re incurred.
The ATO has asked businesses to submit comments on TD 2022/D2 by 25 March via email to michael.tenace@ato.gov.au or via phone on (03) 9275 4389.
