About the Client

Jan, a professional in her early 30s, was renting an apartment in North Sydney and had recently wrapped up her role at an Australian start-up. Taking a well-earned career break, Jan was weighing up her next move—professionally and financially.

During her time at the start-up, Jan received multiple tranches of employee shares through various share schemes. Upon her departure from the company, she sold some of these shares, prompting questions about her tax obligations.

The Challenge

Jan was unsure about the tax treatment of the employee shares she received and sold. With new investment opportunities on the horizon, she wanted a clear understanding of any potential tax liabilities before making further financial commitments.

Since the financial year had not yet ended, she couldn’t finalise her tax return, but she sought advice to get ahead of her position and ensure no surprises later.

Our Approach

Time was of the essence. Jan needed clarity to confidently assess upcoming opportunities.

At SaabTeece, our Employee Share Scheme specialist began by reviewing all relevant documentation Jan provided relating to the various share plans she had received during her employment. Because the shares had been granted at different times—and under potentially varying tax rules—each tranche required detailed analysis.

We compiled a comprehensive summary outlining:

• The types of employee share plans involved.
• Vesting schedules and associated taxing points.
• Key dates impacting taxation (grant, vesting, exercise, acquisition, and sale).
• Capital gains calculations for shares sold upon exit.

We also determined Jan’s likely tax position for the current and upcoming financial years. This gave her the confidence to make informed decisions about new ventures without the uncertainty of hidden tax obligations.

The Outcome

Armed with a clear, tailored tax overview, Jan was able to move forward with her next career and investment steps, knowing exactly how her employee share schemes would impact her tax return.

This proactive approach allowed Jan to:

• Avoid unexpected tax liabilities.
• Understand the timing and treatment of share-related income.
• Plan effectively for future financial moves.

Understanding Key Employee Share Scheme Dates

To navigate employee share schemes effectively, it’s important to understand the critical dates that influence taxation:

– Grant Date

The date shares or options are offered. This often determines the type of scheme and whether concessional tax treatments (like start-up provisions) apply. The grant date plays a key role, even if shares vest years later.

– Vesting Date

The date the shares/options become fully owned or exercisable. Vesting schedules vary between employers and must be tracked carefully.

– Exercise Date

Relevant for options, this is when the employee exercises the right to purchase shares. This may trigger a taxing point.

– Acquisition Date

Typically the vesting date for shares, or the exercise date for options. This determines ownership and can affect CGT calculations.

– Sale Date

The date shares are sold or liquidated, which finalises capital gains or losses for tax purposes

LEGAL WARNING

This case study provided here is intended for general informational purposes only. It is not intended as legal, financial, or professional advice specific to your individual circumstances. The information presented in this case study is of a general nature and may not apply to your unique situation.

We strongly advise that you seek advice tailored to your particular needs and circumstances. Your specific situation may not be adequately addressed by the general information contained in this case study.

Any actions or decisions taken based on the information in this case study are solely at your own risk. Our accounting firm, its employees, and representatives shall not be held responsible for any consequences resulting from your reliance on this case study without seeking individualised professional advice.