The changes to the tax treatment of employee share schemes took effect on 1 July 2015 and apply to ESS interests (shares, stapled securities and rights to acquire them) issued on or after that date. Some existing rules have changed and some new concessions apply to employees of start-up companies.
Changes for start-up companies
- The discount provided for eligible ESS interests will not be taxed under the ESS rules as long as certain conditions have been met.
- Subsequent gains on the disposal of the rights or shares will still be taxed under the capital gains tax rules. However, the period of ownership of a share acquired on exercise of a right starts when the right is acquired.
Changes to existing rules
The main changes are:
It is important to keep up to date with the latest changes about ESS as they can affect you.
- the deferred taxing point for ESS interests in tax-deferred schemes
- the test for significant ownership or voting rights limitations
- a tax refund is possible where an employee acquires rights but does not exercise them.