ESS Taxation - Employee Shares

Discussion in 'Accounting & Tax' started by melbgal, 20th May, 2018.

Join Australia's most dynamic and respected property investment community
Tags:
  1. melbgal

    melbgal Member

    Joined:
    7th Dec, 2015
    Posts:
    9
    Location:
    Melbourne
    Hi, can anyone help with this question?

    I have a deferred taxing point occurring on Discount ESS interests acquired/granted earlier through my employer (label 12G). Does anyone know if I can offset some of this amount with a CGT loss from (normal) share trading ? Or can this type of loss only be offset against other CGT events.
     
  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    No.

    An ESS discount is taxed as income. Typically when a trigger event occurs. The discount on the shares will be reported by the employer and you may face a tax shortfall when it is triggered since no tax is withheld.

    Only after those ESS interests are sold may a CGT gain occur. Of course the ESS discount increases the costbase so its virtually as if you bought the shares at market, not at a discount. Get that wrong and you will overpay CGT.

    The ESS discount forms part of the cost of the shares but the capital gain / loss is only determined after disposal. Then any gain can offset a C/fwd loss BEFORE the 50% discount gets calculated
     
  3. pippen

    pippen Well-Known Member

    Joined:
    10th Aug, 2016
    Posts:
    1,428
    Location:
    australia
    Quick question about employee share scheme, so the discount on referral scheme which goes on column F as income say 10k which needs to be placed in tax return this is then taxed at marginal rate to calculate tax payable on those employee shares?

    Ie 2000 rights which now vest and over a 5 day weighted average price the market value equals 10k this 10k goes in tax return as additional income and I pay tax on that amount at my marginal rare? (39%) cheerd
     
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    What does the ESS payment summary show ? The employer will value and report the discount etc
     
  5. pippen

    pippen Well-Known Member

    Joined:
    10th Aug, 2016
    Posts:
    1,428
    Location:
    australia
    12 employee share scheme discount from deferral F12 label = 4,950
     
  6. pippen

    pippen Well-Known Member

    Joined:
    10th Aug, 2016
    Posts:
    1,428
    Location:
    australia
    I figure it would be marginal tax rate × the employee share scheme discount figure
     
  7. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    Not necessarily
     
    pippen likes this.