Tax partner Shaun Cartoon writes in today’s edition of The Australian that while the government searches for new ideas to boost productivity, it should be exploring a thriving new model of employee share ownership that’s taken off in the United Kingdom.
Coinciding with a visit to Australia by the architect of employee ownership trusts (EOTs) in the UK, Graeme Nuttall OBE, Shaun’s article explains how this new model is resulting in more than one company per day being sold to its employees. There are already more than 1750 EOTs operating in the UK, the top 50 of which account for some £23bn ($45bn) in annual sales revenue.
“Not only is the trend towards EOTs contributing to employee wellbeing and more equitable rewards for business success,” Shaun writes. “A landmark report released late last year by the UK Employee Ownership Association found that the employee ownership sector is outperforming national productivity numbers by 8-12 per cent.”
The impetus for this dramatic transfer of power and ensuing lift in business productivity lies in a tax exemption afforded to business owners who sell their business to employees, rather than selling to larger competitors or private equity. But while a pipeline of Australian companies is keen to try, in most cases, the process has stalled due to uncertain tax implications. “Our existing laws around the taxation of trusts make it very tricky to recreate the EOT model in Australia. And without specific tax reform that views the model as a valuable tool for lifting productivity and sharing wealth, it will remain a fringe attraction.”
Which makes Graeme Nuttall’s visit to Australia so timely. Graeme has been invited by Employee Ownership Australia to help educate Australian policymakers around the value of the model. His program includes a meeting with the Fair Work Ombudsman, Anna Booth, and events for would-be EOT company representatives will be hosted by Employee Ownership Australia and Arnold Bloch Leibler in Sydney and Melbourne.
To read Shaun’s article, click here.
Next week, Arnold Bloch Leibler is proud to host two events with Graeme Nuttall in our Melbourne and Sydney offices. For more information and to register, click here.
