ESS – Rollover relief

If you acquired shares or rights under an employee share scheme (ESS) and a corporate restructure or takeover happens, tax relief may be available under the ESS rules if you received replacement shares or rights.

From 1 July 2004 rollover relief applies if all of the following occur:

• you acquired shares, stapled securities or rights (including options) to acquire them (ESS interests) under an employee share scheme (ESS) and have deferred declaring the discount on those ESS interests as income until the cessation time or deferred taxing point
• there is a 100% corporate takeover or a corporate restructure that is a merger, a demerger or other form of restructure that results in you acquiring replacement shares or rights in the new company
• as a result of the corporate takeover or restructure, your ESS interests were replaced, wholly or partly, by ESS interests in one or more companies (the new company) that match the ESS interests you held in an old company or group (the old company)
• as a result of the corporate takeover or restructure, you no longer hold the ESS interests in the old company
• after the corporate takeover or restructure, you are an employee of
  • the new company
  • a subsidiary of the new company
  • a holding company of the new company
  • a subsidiary of the holding company of the new company
   
• without rollover relief, you would have had a cessation time or deferred taxing point because of the corporate takeover or restructure.

Rollover relief may also be available if:

• you acquired ESS interests before 1 July 2009 and made an election to include the discount as income in the year that you acquired the ESS interests, or
• you acquired the ESS interests under a section 26AAC ITAA 1936 ESS, and
• you were subject to a corporate restructure.

Before 1 July 2004, a corporate restructure could trigger a cessation time if you disposed of your ESS interests in the old company or your employment ceased at the time of the corporate restructure. The law has been changed so that ESS interests held by you may no longer have a cessation time as a result of a corporate restructure that happens after 30 June 2004.

Find out about:

• Rollover relief conditions
• Rollover relief FAQs
• Examples – rollover relief