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Tax treatment of remuneration in form of $X p.a. of ordinary shares

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I'm considering a job with a start-up company where a component of the remuneration being offered will be in the form of receiving the equivalent of $X of ordinary shares in the company, at the prevailing market value per share, at the end of each year of service.

 

What would be the personal tax implications of being remunerated as such? Is it as simple as having to declare $X as income and paying personal marginal rate tax on it for the financial year it was received? Or is there some way to defer the taxation until realisation of the value of the shares?

 

Note: The company does not currently have an Employee Share Scheme but may implement one in the future, at which time I can elect to move to the scheme.

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ATO Community Support

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Hi @chris79

 

Welcome to the forum.

 

Normally a Employee Share Scheme might provide various options however outside that where the granting of a share or option constitutes income or wages, then you might expect the amount of wages is the value of the share or option on the relevant day paid  which will incur tax obligations accordingly.

 

Kind Regards
MarkA

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Most helpful response

ATO Community Support

Replies 2

Hi @chris79

 

Welcome to the forum.

 

Normally a Employee Share Scheme might provide various options however outside that where the granting of a share or option constitutes income or wages, then you might expect the amount of wages is the value of the share or option on the relevant day paid  which will incur tax obligations accordingly.

 

Kind Regards
MarkA

Initiate

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Thanks for your response MarkA.

 

Can you further advise which income section this would need to be reported under in a tax return?

ATO Community Support

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Hi @chris79

 

Ideally the employer should be encouraged to explore their eligibility under either a  FBT or ESS . Normally all income paid will be reflected on the Income Statement provided and should guide you as to  where (pre-fill) or how it is reported.  That said any other income out of the normal may also be reported at Other Income Item 24.

 

Cheers
MarkA