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  • Concessional ESS

    Most employee share schemes (ESS) allow your employees concessional tax treatment if they receive their ESS interests at a discount and meet certain conditions.

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    Eligible employees

    To qualify for concessional tax treatment the following general conditions must be met:

    • the ESS interests you provide to your employees must be in your company or your holding company
    • when your employee acquires the interest, all ESS interests available for acquisition under the scheme must relate to ordinary shares
    • immediately after acquiring the ESS interests, your employee (and their associates) must meet the     
      • 5% ownership and voting rights test (ESS interests acquired before 1 July 2015)
      • 10% ownership and voting rights test (ESS interests acquired after 30 June 2015).

    Ineligible employees

    Your employees will not be eligible for concessional tax treatment if all of the following apply:

    • the main business of the company in which they acquired the ESS interests is the acquisition, sale or holding of shares, securities or other investments (directly or indirectly)
    • they are employed by both your company and a subsidiary of your company or a holding company of your company, or a subsidiary of the holding company.

    Specific conditions

    Once the general conditions are met, the conditions that are specific to each concession must also be met.

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    Last modified: 07 May 2020QC 47626