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  • Employee share scheme options and acquisition of shares by self-managed super funds

    How we treat employee share scheme shares or share options received by a self-managed super fund.

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    As a trustee of a self-managed superannuation fund (SMSF), you need to be aware of how we treat employee share schemes (ESS). We recommend you seek professional advice or apply for specific advice if needed.

    See also:

    Employee share scheme (ESS)

    An ESS is a scheme under which shares, stapled securities and rights (including options) to acquire shares and stapled securities in a company are provided to its employees (including current, past or prospective employees and their associates) in relation to their employment. Usually shares or rights acquired under an ESS are acquired at less than market value.

    The trustee of your SMSF is an associate of each member of your fund, and there are specific tax rules for shares or rights acquired by an associate.

    See also:


    A super contribution is anything of value that increases the capital of a super fund and is provided with the purpose of benefiting one or more particular members of the fund, or all of the members in general.

    For example, when shares acquired under an ESS are transferred to an SMSF at less than market value, the acquisition results in a super contribution because the capital of the fund increases and the purpose of the acquisition is to benefit a member, or members, of the fund.

    See also:

    Restrictions on SMSFs accepting contributions

    Acquiring assets from related parties

    Generally shares or options transferred to an SMSF under an ESS are considered to have been acquired from the employee (who is usually a related party of the fund).

    An SMSF trustee can acquire shares or options in companies from related parties as long as they are acquired at market value and either:

    • the shares or options are listed on the Australian Securities Exchange (ASX)
    • the company is a related party of the SMSF and the acquisition will not result in the level of in-house assets of the fund exceeding 5%.

    If listed shares or options are transferred to an SMSF for no consideration, or for less than market value consideration, but the difference between their market value and the actual consideration paid (if any) is treated as a contribution, the shares or options will be considered to have been acquired at market value.

    Shares or options in companies that are not related parties of an SMSF, and are not listed on the ASX, cannot be acquired from related parties of the SMSF.

    See also:

    • SMSFR 2010/1Self Managed Superannuation Funds: the application of subsection 66(1) of the Superannuation Industry (Supervision) Act 1993 to the acquisition of an asset by a self managed superannuation fund from a related party.

    Other restrictions

    The contributions your SMSF can accept are restricted by:

    • the age of the member the contribution is made for
    • whether the SMSF has a valid tax file number (TFN) for the member
    • the amount of the contribution, if the contribution is a fund-capped contribution (this is generally a contribution made by, or on behalf of, the member and does not include employer contributions).

    If your SMSF cannot accept the contribution for the member, you must, within 30 days of becoming aware this, return the amount to the person or entity that made the payment.

    See also:

    Questions and answers

    Is there a super contribution when an SMSF receives shares or options to acquire shares for less than market value as part of an employee share scheme?


    If the scheme says the member can nominate their SMSF to receive shares or options and the trustee of the SMSF pays no consideration or less than the market value consideration for the shares or share options, the acquisitions by the SMSF result in super contributions if the contributions are made for the purpose of benefitting one or more particular members of the fund, or all of the members in general.

    Are shares or share options issued to an SMSF through an ESS arrangement for an employee who is a member of an SMSF an employer contribution or personal contribution?

    It is generally a personal contribution from the employee to their SMSF if the employee is granted personal rights to receive shares, or share options at a discount to market value, under an employee share scheme and either:

    • surrenders those rights so that the SMSF receives the shares or share options
    • exercises those rights but nominates their SMSF to receive the shares or share options.

    Are the ordinary shares issued to the employee's SMSF after the employee exercised the share options through an ESS considered a personal contribution?

    Yes, generally. There is a personal contribution to the SMSF that is equal to the market value of the shares if an employee who is a member of an SMSF:

    • acquires share options entitling the option holder to shares on the exercise of the options
    • exercises those options but directs that the shares be issued in the name of their SMSF at no cost to the SMSF.

    An asset will generally be considered to be contributed when the SMSF gets legal ownership of the asset.

    When the shares or share options are acquired by the SMSF from a related party does it count as an in-specie contribution?

    Yes, acquiring shares, or share options, in an SMSF for less than market value results in an in-specie contribution.

    In-specie contributions are contributions to an SMSF in the form of an asset other than money.

    There are restrictions on the types of assets that can be contributed in-specie to an SMSF.

      Last modified: 16 Jun 2016QC 26221