Complete this section for any employee share scheme interests (ESS interests) that you or your associate received under an employee share scheme.
Things to know
ESS interests are:
- shares
- stapled securities (provided at least one of the stapled interests is a share in a company)
- rights to acquire shares and stapled securities.
An ESS interest acquired by your associate in regard to your employment is treated as though the ESS interest was acquired by you.
The discount is the difference between the market value of the ESS interests and the amount paid to acquire them.
The ESS interests can:
- be from an Australian company or a foreign company
- relate to your employment inside or outside Australia
- relate to a work relationship other than employment, for example sub-contracting.
You will be taxed on the discount in the year in which you acquired the interest. Such schemes are known as 'taxed-upfront schemes'. However, if you and the scheme meet certain conditions the taxing point is deferred until a later time. These tax-deferred schemes are known as 'deferral schemes'.
Changes to ESS interests acquired on or after 1 July 2015 include:
- changes to the 'deferred taxing point'
- a tax concession through which some discounts on ESS interests in start-up companies will not be taxed under the employee share scheme regime, as long as the eligibility criteria are met. Subsequent gains on the disposal of these ESS interests will be taxed under the capital gains tax rules.
Discounts on eligible ESS interests provided to you by a start-up company will not be included on your Employee share scheme statement and should not be included at this section.
Read on if any of the following apply to you:
- you received a discount on ESS interests acquired under a 'taxed-upfront scheme'
- a 'deferred taxing point' occurred in respect of your ESS interests under a 'deferral scheme'.
You may be entitled to reduce the amount of the discounts received under taxed-upfront schemes by up to $1,000. You may qualify for the reduction if certain amounts on your tax return add up to $180,000 or less. MyTax will calculate this for you. For more information, see ESS adjustment.
The rules of the scheme or a letter from your employer should advise you whether you have acquired ESS interests under a taxed-upfront or deferral scheme. Your employer must provide you with an Employee share scheme statement which shows you the value of any discounts you have received on your ESS interests in 2019–20. You will need this statement to complete this section.
Discounts on eligible ESS interests provided to you by a start-up company will not be included on your Employee share scheme statement. Do not show the discount at this section.
For more information, see Employee share schemes.
Completing this section
You will need your Employee share scheme statement from each employer with whom you participated in an employee share scheme.
For more information, see What you may need.
We pre-fill your tax return with employee share scheme information provided to us. Check them, and add any employee share scheme statements you received that have not pre-filled.
To personalise your return to show employee share schemes, at Personalise return select:
- You had other income not listed above (including employee share schemes)
To show your employee share schemes, at Prepare return select 'Add/Edit' at the Other income banner.
At the Employee share schemes (ESS) banner:
- For each employee share scheme not pre-filled in your tax return, select Add and enter information into the corresponding fields.
- Select Save.
If myTax calculates that you may be entitled to reduce the amount of the discounts received under taxed-upfront schemes, this will be displayed as ESS adjustment. - Select Save and continue when you have completed the Other income section.
For more information, seeRecord keeping.
What you may need
You will need your Employee share scheme statement from each employer with whom you participated in an employee share scheme. Each statement shows the amount of your discount and whether your discount was from a:
- taxed-upfront scheme eligible for reduction
- taxed-upfront scheme not eligible for reduction
- deferral scheme.
Statements may also show 'tax file number (TFN) amounts withheld' where applicable. TFN amounts withheld are amounts of tax withheld when you do not provide your TFN or ABN to your employer.
If you received ESS interests from a foreign employer, you might not receive an Employee share scheme statement.
If you do not have all your Employee share scheme statements or comparable statements, contact your employer. If you are unsuccessful in obtaining any of these, see PAYG payment summary – individual non-business.
If an associate has acquired an ESS interest as a result of your employment, you must include the discount in your assessable income. Your associate will not need to include the discount on their tax return.
If you qualify as a temporary resident for tax purposes, special rules may apply if you acquired ESS interests under an employee share scheme. For more information, see ESS – Foreign income exemption for Australian residents and temporary residents.
If you disposed of your ESS interests because of a corporate restructure or takeover and received replacement shares, stapled securities or rights, special provisions may apply. For more information, see ESS – Rollover relief.
ESS adjustment
If you show an amount at Discount from taxed-upfront schemes - eligible for reduction you may be entitled to a reduction of up to $1,000 on the amount that you are assessed on. This will be shown in myTax as ESS adjustment.
MyTax will calculate this for you.
If you would like to see how myTax works this out, follow these steps.
- Did you show an amount at Discount from taxed-upfront schemes - eligible for reduction?
Yes − go to step 2.
No − you are not entitled to an ESS adjustment. - Calculate the total of the following amounts from your tax return:
- your taxable income for the year (calculated as though you are not entitled to the $1,000 reduction), excluding any assessable First home super saver released amount
- your total reportable fringe benefits amounts
- your reportable employer superannuation contributions
- your net financial investment loss
- your net rental property loss
- your deductible personal superannuation contributions.
- Is the amount calculated at step 2 greater than $180,000?
Yes − you are not entitled to an ESS adjustment.
No − go to step 4. - Is the total amount for Discount from taxed-upfront schemes - eligible for reduction greater than $1,000?
Yes − your ESS adjustment is $1,000.
No − your ESS adjustment is the total amount of Discount from taxed-upfront schemes - eligible for reduction.