Employee share schemes are becoming increasingly popular as a way for employers to incentivise and reward their employees. These schemes provide employees with an opportunity to own shares in the company they work for, giving them a vested interest in the company’s success.

There are different types of employee share schemes, including share acquisition plans, rights plans, and performance rights plans. Each scheme has its own tax implications, which employers and employees need to be aware of.

In a share acquisition plan, employees are offered the opportunity to purchase shares in the company at a discounted price. The difference between the discounted price and the market value of the shares is treated as taxable income for the employee.

In a rights plan, employees are given the right to purchase shares at a future date at a discounted price. Again, the difference between the discounted price and the market value of the shares is treated as taxable income for the employee.

In a performance rights plan, employees are granted the right to receive shares in the company if certain performance criteria are met. If the criteria are met, the value of the shares received is treated as taxable income for the employee.

Employee share schemes can be a valuable tool for employers to incentivise and reward their employees. They can also be a great way for employees to invest in the company they work for and benefit from its success.

However, it’s important for employers and employees to understand the tax implications of these schemes. If you require assistance on this matter, please contact our office at 03 9973 5905.