Concessional ESS

Most employee share schemes (ESS) allow your employees concessional tax treatment if they receive their ESS interests at a discount and meet certain conditions.

On this page:

• Eligible employees
• Ineligible employees
• Specific conditions

Eligible employees

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).
   

Ineligible employees

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.

Specific conditions

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