Income Tax Treatment on Vested US Shares for employee

Hello

My partner works for a US company and received a small number of vested shares since a few years ago and already sold them recently

Would you know that she needs to declare the total amount received as income or only 50% because of CGT when she lodge her individual tax returns next year?

Thanks in advance

 

If beneficial ownership was more than 12 months ago I would think the 50% CGT discount would apply. But I am not knowledgeable in this area.

 

thanks Terry

 

The structuring of employee share schemes is very wide.

The HR department will normally have a summary of the tax consequences of the share scheme and this is often accompanied by an opinion from a major accounting firm.

Effectively the employers want to stop any questions from tax advisors so they prepare a “once and for all” package.

If the shares are in a privately held US company you will probably get a US tax opinion directed at Australian tax residents.

 

Thank you Ross

 

Many US companies will report employee share scheme income to the ATO and the employee with get a ESS payment summary at the time shares vest to the the employee. The discount at that time is generally assessable. This is often a element of the costbase for the shares together with the original sum paid (if any). This will impact the CGT calc when the shares are sold. The sale of shares is NOT a case of they were issued for $0 and were sold for $100.

Many also confuse options and exercise of optiosn wit shares and vesting. Sometimes options are issued and exercised and the tax consequences are very different and the CGT discount can be impacted.

Currency rates are also a consideration regardless of whether the USD are converted to AUD.