Employee share schemes

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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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Some companies encourage employees to participate in employee share schemes by offering them discounted shares or rights (including options) to acquire shares. Employee share scheme income tax rules (ESS tax rules) apply to this discount.

. Discounts on shares and rights acquired under an employee share schemes (ESS)after 1 July 2009

will generally be assessed in the income year in which the shares or rights are acquired.

Deferral of the tax liability is limited to schemes that meet the qualifying conditions for deferral under the earlier law.

See also:

Employee share schemes – answers to frequently asked questions by employees

CGT implications for employee shares and rights under a corporate restructure

If employee shares or rights are exchanged for replacement shares or rights in a new company under a corporate restructure that happened on or after 1 July 2004, a rollover may be available so that there is no taxing point under the ESS tax rules. Corporate restructures affected include mergers, demergers (in limited circumstances) and 100% takeovers. Any capital gain or capital loss made on the employee shares or rights because of the restructure will be disregarded where this rollover applies.

See also:

Employee share scheme rollover relief

Changing residence or working in multiple countries

There are specific CGT rules relating to ESS shares or rights held by employees who become, or cease to be, Australian residents. There are also specific rules for temporary residents.