Many companies use share incentive schemes to align the objectives of key staff members and the company. The design may look different between – for example, listed / private company. However, the tax considerations at the core of the share incentive schemes are actually very similar – so question is then, what are these key tax matters to consider?

A recent ruling, BCR91, highlighted some of them, being:

(1) When and on what amount the employee is taxed. Closely related to this is the employer’s obligation to withhold employees’ tax.

(2) How dividends that flow in respect of these shares before vesting may be taxed.

(3) Whether the employer or settler is entitled to a deduction.

(4) What is the impact of the involvement of a trust in these structures?

I discuss the facts of the ruling and these considerations in more detail in episode 67 of my podcast, Tax Break. You can listen to it at the link below.