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Navigating the new employee share schemes tax rules


Significant changes have recently been made to the rules about the taxation of employee share schemes. In particular, the changes have reversed some amendments made in 2009 to the taxing point for rights to shares, and have introduced a further taxation concession for employees of certain small startup companies. Rights to acquire shares granted on or after 1 July 2015 no longer need to satisfy the “real risk of forfeiture” test, which was introduced in 2009, to qualify for tax deferral and are now generally taxed on exercise.

This article examines the new rules in detail. The article discusses how the changes may be applied in practice, which shares and options qualify for the new startup tax concessions, which employees are eligible, key features of the tax concession for options and shares, valuing shares of unlisted companies, and employee share scheme reporting for startup shares and options.

Author profile

Shaun Cartoon FTI
Shaun advises on a broad range of taxation issues in corporate, international and employment taxation, with a focus on M&A, capital management, employee share plans and superannuation. He also has experience in tax audits and disputes and has been involved in the carriage of tax cases through the Australian courts. Shaun is a member of Allens' Accelerate, an initiative aimed at providing cost efficient tax and legal services to high growth startup companies in Australia. - Current at 24 April 2017
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