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What employees need to know about employee share schemes (ESS).

Last updated 6 May 2020

An employee share scheme (ESS) provides you with a financial share in the company where you work.

You are participating in an ESS if you:

  • receive shares in the company you work for at a discounted price
  • have the opportunity to buy shares in the company in the future (right or option).

Tax concessions can apply to your ESS interests if you and your employer have followed special tax rules. These depend on both:

  • the type of ESS
  • when you acquired the interests.

If the ESS interests you receive in the company where you work are not discounted, then the ESS tax rules do not apply. However, capital gains tax can still apply.

Shares at a discounted price

The discount refers to the difference between the market value of the ESS interests and the amount you paid to acquire them. The discount forms part of your assessable income and needs to be included in your tax return.

Lodging your tax return

If you lodge a paper return, ESS discounts are recorded at Question 12 of the individual income tax return.

If you use myTax or lodge with a registered tax professional, we pre-fill this information in your tax return from mid-August each year.

Your employer must provide you with an ESS statement by 14 July after the end of each financial year, which shows you the amount of your discount. Double check the pre-filled information is consistent with the amount shown on your ESS statement.

You can use our online calculator to help work out the:

  • discount you received from the scheme
  • market value of your unlisted rights
  • weighted average share closing price for your shares.

See also  

There are different types of employee share schemes (ESS) your employer may offer you. It is important to know about the different schemes as their tax treatment differs.

Your entitlement to shares may be confirmed at a later time.

The current law may apply to shares or rights acquired before 1 July 2009.

Your employer will give you information about the ESS and an ESS statement.

Being in an employee share scheme will affect your tax.

You need to keep documentation about your ESS interests.