This section is about discounts on employee share scheme interests (ESS interests) that you or your associate received under an employee share scheme.
Essentials
ESS interests are:
- shares
- stapled securities (provided at least one of the stapled interests is a share in a company)
- rights to acquire shares and stapled securities.
An ESS interest acquired by your associate in regard to your employment is treated as though the ESS interest was acquired by you.
The discount is the difference between the market value of the ESS interests and the amount paid to acquire them.
The ESS interests can:
- be from an Australian company or a foreign company
- relate to your employment inside or outside Australia
- relate to a work relationship other than employment, for example sub-contracting.
You will be taxed on the discount in the year in which you acquired the interest. Such schemes are known as 'taxed-upfront schemes'. However, if you and the scheme meet certain conditions the taxing point is deferred until a later time. These tax-deferred schemes are known as 'deferral schemes'.
Changes to ESS interests acquired on or after 1 July 2015 include:
- changes to the 'deferred taxing point'
- a tax concession through which some discounts on ESS interests in start-up companies will not be taxed under the employee share scheme regime, as long as the eligibility criteria are met. Subsequent gains on the disposal of these ESS interests will be taxed under the capital gains tax rules.
Discounts on eligible ESS interests provided to you by a start-up company will not be included on your Employee share scheme statement and should not be included at this section.
If any of the following apply to you:
- you received a discount on ESS interests acquired under a 'taxed-upfront scheme'
- a 'deferred taxing point' occurred in respect of your ESS interests under a 'deferral scheme'
- 'cessation time' occurred in relation to a qualifying shares, stapled securities or rights you acquired before 1 July 2009 under an employee share scheme, and you had not elected to be taxed upfront on the discount.
You may be entitled to reduce the amount of the discounts received under taxed-upfront schemes by up to $1,000. You may qualify for the reduction if certain amounts on your tax return add up to $180,000 or less. MyTax will calculate this for you. For more information, see ESS adjustment.
The rules of the scheme or a letter from your employer should advise you whether you have acquired ESS interests under a taxed-upfront or deferral scheme. Your employer must provide you with an Employee share scheme statement which shows you the value of any discounts you have received on your ESS interests in 2018–19. You will need this statement to complete this section.
Discounts on eligible ESS interests provided to you by a start-up company will not be included on your Employee share scheme statement. Do not show the discount at this section.
For more information, see Employee share schemes.
Completing this section
You will need your Employee share scheme statement or comparable statement from each employer with whom you participated in an employee share scheme. See also What you may need.
We pre-fill your tax return with employee share scheme information provided to us. Check for employee share scheme statements you received that are not pre-filled and ensure you add them.
- For each employee share scheme not pre-filled in your tax return, select Add and enter information into the corresponding fields.
- Select Save.
- If myTax calculates that you may be entitled to reduce the amount of the discounts received under taxed-upfront schemes, this will be displayed as ESS adjustment.
- Select Save and continue.
Tax tip
Make sure you keep your statements for at least five years after you are assessed on your discounts.