On 1 July 2015 some important changes were made to the taxation of employee share schemes in Australia which will make employee option schemes more attractive for employees, particularly where the company qualifies as an eligible start-up.

  • For all employee option schemes there is the possibility of deferring the taxing point until exercise of the option (previously vesting) if certain conditions are met.
  • For employees of qualifying start-ups, if certain conditions are met, the taxing point can be deferred until the shares or options are ultimately disposed of, and the disposal will be taxed as a concessional capital gain.
  • A legislative determination has been issued which gives a simple and concessional method of valuing shares in start-ups and small companies.
  • Standard documentation has been issued by the Tax Office which can be used to implement simple employee option plans.