Employee share schemes



This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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If you acquired shares at a discount under an employee share scheme, you would have included the amount of the discount in your assessable income on your tax return.

For CGT purposes, the cost base of the shares is the amount paid to the company when you acquired them plus the amount of the discount included in your assessable income under the ordinary tax provisions.

As employee share schemes vary, you may need to seek advice from the ATO if you have sold shares of this type.

Note-Convertible notes

A convertible note is another type of investment you can make in a company or unit trust. Generally, only convertible notes acquired from 20 September 1985 to 10 May 1989 inclusive are subject to CGT. There are special income provisions that apply to convertible notes acquired after this time.

Your capital gain or capital loss will depend on the amount of capital proceeds you receive on the sale or redemption of the convertible note.

Convertible notes earn interest on the amount you pay to acquire the note until its expiry date. On that date, you can either:

  • ask for the return of the money you paid to acquire the note (in which case CGT may be payable) or
  • convert that amount to acquire new shares or units.

If you acquired shares or units by converting a note, you may need to seek advice from the ATO about calculating the cost base of the shares or units.

Last modified: 06 Oct 2009QC 27431