The Recent Pitfalls of Employee Share Schemes

You’ve no doubt heard of employee share schemes.

Chances are you might even be part of one with your current employer.

They can be great, particularly when the markets are bullish.

And guess what? We’re in a bull market right now!

This is where a lot of people are seeing the benefits of employee share schemes this year, especially with the market’s positive momentum over recent months.

Let me explain.

Employee share schemes have their own self-reporting nuances for the purpose of the ATO and your resulting tax obligations at the end of the financial year.

What does that mean, exactly?

Well, at the point of assessment, the shares are valued at a particular price, and you report your estimated scheme income incorporating this value.

So, considering the recent market upswing, what happens if your employer’s company shares have increased significantly since the last reporting period?

This is where they can be advantageous.

You might find yourself in a situation where the initial value for the assessment period has boosted your taxable income, and your shares have also appreciated in value.

I’ve seen this benefit many people this year. The key, especially in a dynamic market, is to have a strategy.