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Tax consequence of receiving a share based payment

Initiate Registered Tax Practitioner

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Replies 4

My client is considering working for shares in lieu of cash. They have agreed on a value for the services and will receive scrip as consideration.

My understanding is that this value (consideration) would constitute taxable revenue in my client's hands and they would need to remit GST on the amount.

 

 

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Most helpful response

Devotee

Replies 3

If cash was paid instead of shares, would the payment be considered employment related or a business to business transaction?

 

If it would be salary, the ESS or FBT provisions, rather than GST, may apply. 

 

GSTR 2001/6 gives some guidance if the transaction is subject to GST. 

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Most helpful response

Devotee

Replies 3

If cash was paid instead of shares, would the payment be considered employment related or a business to business transaction?

 

If it would be salary, the ESS or FBT provisions, rather than GST, may apply. 

 

GSTR 2001/6 gives some guidance if the transaction is subject to GST. 

Initiate Registered Tax Practitioner

Replies 2

Thanks Glen

This is a business-to-business transaction. 

I had a review of the GST ruling and am comfortable with that aspect. Is there a ruling which deals B-2-B scrip for services arrangements?

Devotee

Replies 0

B2B Scrip for service - that sounds like one hell of a barter transaction to me.

 

Company A provides Service X in exchange for shares in Company B in lieu of cash.

 

I recon this falls under 21A (non-cash business transactions). See here.

 

ps. hope its not PSI.

Devotee

Replies 0

I'm not aware of any other rulings.