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Abstract:
A curious feature of the Australian tax treatment of intellectual property is that, while specific tax incentives are given to initial research and development activity which might generate intellectual property with commercial potential, and while significant tax concessions are given to capital gains which might be realised if a project for commercialisation of intellectual property is ultimately successful, there is no special tax assistance for the intermediate phase of commercialisation activity itself. That is the activity by which the knowledge, ideas and inventions generated by the research and development are converted into the business assets capable of producing commercial revenues from marketable goods and services. This Report undertakes a comprehensive review of the features of the Australain income tax system which inhibit or discourage commercialisation of intellectual property. We find that the income tax law revevals a sub-optimal tendency to impose taxation of unrealised gains, and double taxation of realised gains, from intellectual property commercialisation.

Areas we have identified as causing problems include: (a) up-front tax liabilities imposed on the initial contribution of intellectaul property to commercialisation vehicles such as spin-off companies; (b) inappropriate tax liabilities imposed on employee shares in start-up companies; (c) unfavourable tax treatment of start-up losses where the commercialisation vehicle is a limited liability company; (d) denial of tax deductions for many intellectual property commercialisation cost items, such as confidential information, trade secrets, trade marks, brands and goodwill; (e) features of the general tax law which negate the intended benefits of specific concessions such as deductions for research and development and the venture capital and pooled development fund concessions; (f) tendencies in the tax law to encourage relocation of intellectual property ownership and control to more favourable overseas jurisdictions; and (g) tendencies in the tax law to discourage investment in entrepreneurial risk activity as an alternative to passive low-risk investment activity.

taxation, intellectual property, commercial, incentive, concession

Abstract:
Since at least the 1970s, employee share ownership has enjoyed bipartisan political support in Australia. Despite broad and sustained public policy interest in employee share ownership, however, Australian literature on the subject remains scarce. There has also been very little in the way of comprehensive analysis of the regulatory framework. This paper provides an overview of employee share ownership from an Australian perspective. It begins by reviewing the literature on broad-based employee share ownership before turning to examine available data on Australian practice. It then considers how employee share ownership plans are currently provided for in public policy and law. Companies in Australia proposing to offer shares to employees must comply with many regulatory requirements. The paper examines these requirements. The authors also examine features of the current regulatory framework which have been identified as problematic.

Abstract:
Non-executive employees are increasingly being offered the opportunity to participate in employee share ownership plans. In many cases, companies provide their employees with shares or options as a 'gift', either on a one-off or regular basis. Many plans, however, are structured so as to require employees to contribute to the value of the securities. In the cases of contributory plans, the reasons why employees choose to participate are not always clear. This paper reviews existing studies and presents a conceptual framework to explain why employees participate in employee share plans. It examines the relationship between the decision to participate in a plan and a number of demographic and workplace-specific variables. It also identifies key factors that may moderate this relationship, such as the extent of company communication on the plan and company performance. This conceptual framework has been developed on the basis of a synthesis of previous studies and twelve semi-structured interviews conducted with human resource managers and trade union representatives within publicly listed companies.

Abstract:
This research report presents findings from a survey of employee share ownership practice in Australian listed companies. The research focused on broad-based employee share ownership plans (ESOPs): that is, plans that are open to a majority of employees within the company. The purpose of this study was fourfold: (1) to inform public policy debate on the issue of employee share ownership through providing, for the first time, a detailed account of employee share plan practice in Australian listed companies; (2) to examine how, if at all, the regulatory framework in taxation and corporate law is impacting upon the decision by companies to implement ESOPs and the design of their plans; (3) to obtain company views on the adequacy of the current regulatory framework; and (4) to test a range of hypotheses as to the determinants of ESOPs in the Australian context.

Key findings as to company practice include: (1) approximately 57 percent of companies responding to the survey had at least one broad-based employee share ownership plan; (2) significantly more companies reported having a broad-based plan than a narrow-based plan: that is, a plan that is only open to executives; (3) the three most popular reasons for implementing a plan were 'showing employees the company values them'; 'sharing financial success with employees'; and 'aligning employee interests with shareholder interests'; (4) over three quarters of companies that have a broad-based plan have adopted their plan since 2000; (5) the most common type of broad-based ESOP was a plan structured to take advantage of the tax exemption in Division 13A of the Income Tax Assessment Act.

Three structural characteristics were found to have a significant and positive association with the presence of an employee share ownership plan. These were the presence of a centralised human resource function; company growth over the preceding 12 months (measured by the number of employees); and the composition of the workforce (the proportion of full-time to part-time and casual employees). We also found that companies with broad-based ESOPs were significantly more likely to have structures for communicating directly with employees.