Introduction
Direct employees
Can receive NSO?
✅ Yes!
General taxation
Taxes will generally be at exercise unless the shares issued at exercise are subject to genuine restrictions on disposal, in which case tax is deferred until these restrictions lapse.
If taxed at exercise, the taxable amount will be the difference between the market value of the shares at exercise (as determined under Australian tax law) and the exercise price.
Tax on sale. If shares are held for at least 12 months, 50% of capital gain excluded from tax.
General tax, reporting & legal paperwork difficulty score
🤯 🤯 🤯
Tax advantages
Tax deferral available subject to certain conditions.
There’s also a start-up concession that’s even more favorable.
Warning point
409A valuation may not be acceptable for determining the value of options under Australian tax laws.
Specific securities laws exemptions should be used. Beware especially if grant is made to more than 20 persons over a period of 12 months.
EoR employees
Can receive NSO?
✅ Yes!
General taxation
Taxation depends on contractor’s status and grant conditions. Taxation at grant is possible.
Tax on sale. If shares are held for at least 12 months, 50% of capital gain excluded from tax.
General tax, reporting & legal paperwork difficulty score
🤯 🤯 🤯
Tax advantages
Tax deferral available subject to certain conditions.
Warning point
Taxation is not easy to understand. Grantees should be assisted by a personal tax advisor.
Specific securities laws exemptions should be used.
Contractors
Can receive NSO?
✅ Yes!
General taxation
Employees employed via EoR cannot benefit from a deferral concession (>< contractors) and are normally subject to tax at grant.
Tax on sale. If shares are held for at least 12 months, 50% of capital gain excluded from tax.
General tax, reporting & legal paperwork difficulty score
🤯 🤯 🤯 🤯
Tax advantages
No tax advantages seem to be available.
Warning pointEmployee could be taxed at grant and should be informed.
Australian tax laws are complex when it comes to ESOP.
Specific securities laws exemptions should be used.
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Discover everything you need to know about taxation and reporting obligations for you and your team in
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