Mon. Jul 15th, 2024

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What Are ESOP Startup Concessions?

If you are the founder of a startup you want to attract the best possible for your business by offering them financial incentives that are available to other corporations. The Australian government, in recognition of this, changed the tax laws applying to Employee Share Ownership Plans (ESOP) in 2015 by introducing a set of start-up tax concessions.

If your startup meets certain qualification rules, you can benefit from tax concessions for Employee Share Schemes (ESS). These ESOP startup concessions mean that employees pay no upfront tax on either shares or options they are granted and only pay tax when they profit from shares they have been granted and normally comes into effect when they sell the shares or when the company is sold or listed. At this time, employees are only be taxed on the capital gain (or the profit resulting from the increased value of the shares) when they sell.