Most employee share schemes (ESS) allow your employees concessional tax treatment if they receive their ESS interests at a discount and meet certain conditions.
To qualify for concessional tax treatment the following general conditions must be met:
- the ESS interests you provide to your employees must be in your company or your holding company
- when your employee acquires the interest, all ESS interests available for acquisition under the scheme must relate to ordinary shares
- immediately after acquiring the ESS interests, your employee (and their associates) must meet the
- 5% ownership and voting rights test (ESS interests acquired before 1 July 2015)
- 10% ownership and voting rights test (ESS interests acquired after 30 June 2015).
Your employees will not be eligible for concessional tax treatment if all of the following apply:
- the main business of the company in which they acquired the ESS interests is the acquisition, sale or holding of shares, securities or other investments (directly or indirectly)
- they are employed by both your company and a subsidiary of your company or a holding company of your company, or a subsidiary of the holding company.
Once the general conditions are met, the conditions that are specific to each concession must also be met.
Find out about:
- Start-up concession (interests acquired after 30 June 2015)
- Taxed-upfront scheme – $1,000 reduction
- Tax-deferred schemes