Salary sacrifice $5k of shares - worth it?

The ATO doesn't make it easy to understand.

Sounds like the $5k pa will be included in my assessable income down the track when I leave their employment or disposal restrictions lifted, whichever is earlier (deferred taxing point).

Other than timing issue, the main benefit appears to be the gains (if any) between acquisition date and the deferred taxing point to not get taxed, the cost base (and acquisition date) is reset to be the market value on the at the deferred taxing point.

Sounds like shares will be issued at 15% discount to market but also I will lose out on the 9.5% super on the sacrificed $5k ($450).

If I left in 3 years I would be hit with tax on $15k (3 x $5k), not great.

I suppose if share price goes up it will work out well, if the share price is flat or drops it isn't worth it.

 

So the company is giving you a $750 discount on the value of the shares and you're complaining about losing $450 in super contribution guarantee. Almost as good as arguing that you don't want to work overtime because all of the extra income goes to tax.

So you would rather get the income today and pay tax today rather than delaying it by 3 years?

 

If your employer is offering you an ESAS the HR department is normally great at letting you know how they work. The HR team normally have a tax opinion attached to their advice.

Generally an employers offer for shares is attractive.

 

A $300 discount on a $5k purchase of something I wasn't going to buy doesn't excite me, it really isn't going to influence my decision.

I may prefer to take the income now and pay off debt than put money into a share I wouldn't normally purchase through a scheme with what appears to be marginal benefits.

 

Employee share scheme are intended to assist staff to have ownership interest in the success of the business. Unless its a executive scheme most scheme are limited in the benefit as being a minor discount.

Paying off a debt means you will use the 60% after tax and possibly (!!) extinguish a debt. In reality its unlikely you will determine and allocate the monthly net amount and save it that way.

In three years time if you left and they sell down your shares the tax due will also be paid by the proceeds of the shares that are sold !!! If they have risen in value ??

 

Would directly affect savings for me as it would reduce the amount going into my "living expenses account" and I would need to top up that account from my savings account more often.

Research the company a bit more (I work in a subsidiary of a subsidiary of the listed entity) and I think the odds are that the share price will be lower in the next 1-3 years that it is now.

 

The fundamental reason has to be for a financial benefit.
Maybe dont share that view out loud at work !

 

CBA Financial Operations employees and contractors (and their household) are restricted from trading CBA shares except for brief windows after the financial announcements are made.

For @Vassago, if your expectation is the share price would be lower in the next 1-3 years, it doesn't sound great. But then again, could dividends make up for it?

 

Depends where you work in the company too. There was a insider trading case run by ASIC where a employee with access to key company events knew markets would be affected by news to be disclosed to the ASX. He had his mate trade the shares. His mate spilled the beans to ASIC.

Husband of a well known person often in media : 16-180MR Oliver Curtis found guilty of insider trading conspiracy | ASIC - Australian Securities and Investments Commission

Buying and selling shares because you work inside a company and know its performing well isnt insider trading. Selling ahead of bad news others dont know may be. Buying ahead of confidential good news may be.

Persons with key positions and knowledge may be embargoed from all trading without disclosure to the company. The ASX listing rules cover these sorts of activities. Directors may be required to disclose a sale or purchase directly or indirectly in any value.

 

If the CFO goes and buys some shares just before the results are released because he knows the business is performing well, pretty sure ASIC will be knocking on his door.

 

"because your work inside a company""...obviously that wont apply to a CFO who knows a market significant event will occur. Listed companies all have rules and the CFO would know that. The affected persons with a higher standard are termed KMPs. (Key Management Personel)

https://www.asx.com.au/documents/rules/gn27_trading_policies.pdf