Australia

Australia has a strong tech sector in Sydney, Melbourne, and Brisbane. Equity compensation is governed by Employee Share Scheme (ESS) rules—and the tax treatment depends on whether your scheme is "taxed upfront" or "tax-deferred."

Overview of Australian Tax System

Australia uses a progressive income tax with Medicare levy:

Medicare levy of 2% applies above certain thresholds.

RSU Taxation

At Vesting

RSUs are typically taxed when they vest—when the restrictions lift and you receive shares. The value at vesting is assessable income (employment income). This can push you into a higher bracket, so plan for the tax.

At Sale

Any gain from the vesting value to the sale price is subject to Capital Gains Tax (CGT). If you hold the shares for 12+ months, you may get a 50% CGT discount (only half the gain is taxable).

Stock Options

Tax-Deferred Schemes

Many Australian ESS are tax-deferred. You're not taxed at grant or exercise—you're taxed at a "deferred taxing point," which is usually the earliest of:

• When restrictions lift
• When you sell
• When you leave the company (in some cases)

The discount (difference between market value and what you paid) is the taxable amount.

The 30-Day Rule

Important: If you sell within 30 days of the deferred taxing point, the tax event shifts to the sale date. So if you vest and sell immediately, you're taxed on the sale—not at vesting. This can simplify things but also change the timing of your tax.

Start-Up Concession

For eligible start-ups, a concession may apply: no tax on the discount at acquisition. Instead, CGT applies when you sell. This can be beneficial if the shares appreciate. Eligibility depends on company size, structure, and other factors.

Key Planning Points

• ESS statement: Your employer must provide this by 14 July. It shows the taxable discount. Use it for your tax return.
• 30-day rule: If you're in a tax-deferred scheme and plan to sell, selling within 30 days of vesting can shift the tax event.
• Leaving your job: Ceasing employment can trigger the deferred taxing point for unvested equity—check your scheme rules.
• ESIC shares: Early-stage innovation company shares may get modified CGT treatment (gains disregarded if held 12+ months but less than 10 years).

Sources

• Australian Taxation Office (ATO): Employee share schemes
• ATO ESS guidance for employees
• Income Tax Assessment Act 1997

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Disclaimer: This guide is for educational purposes. Australian tax law is complex. Consult a qualified Australian tax advisor before making decisions.

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Last Updated: March 2026 | Research Team: VestingStrategy