Understanding your options


An employee share scheme is a common employee benefit in Australia. It can be an effective way to attract and retain talented workers, while aligning employee interests with those of company shareholders.

The scheme might offer shares as part of your salary package, or offer you the opportunity to buy shares, potentially through a loan that the company provides. For many people, this is the first investment in equities they will make and there are a number of important considerations before deciding to participate in an employee share scheme.

Worked example: things you may want to consider when entering into an employee share scheme

Michael joined the technology company, Smith and Taylor, in January of the relevant tax year. As part of his salary package, he was offered the ability to purchase $1,000 worth of shares through a salary sacrifice arrangement.

Under the terms of the employee share scheme, the shares are purchased without brokerage, at a volume weighted average price at a future date. If Michael bought the shares on the Australian Securities Exchange (ASX), he would have to pay the market price, as well as brokerage. By participating in his employee share scheme, concessional tax treatment may be available to Michael.

After thinking through the pros and cons of participating in the employee share scheme, Michael decided to seek independent financial advice before making a decision.

The scheme might either offer shares as part of your salary package, or offer you the opportunity to buy shares, potentially through a loan that the company provides.

Things to know about employee share schemes

  • Shares purchased through an employee share scheme are usually purchased free of brokerage, however shareholders may need to pay brokerage if they decide to sell their shares in the future
  • Depending on the type offered by the company, the discount income amount of any shares acquired under an employee share scheme will either be taxed at the time the shares are granted or may be deferred so that any tax is payable at a later point
  • Subject to meeting certain conditions of an employee share scheme, a concession may apply where employees can reduce their taxable discount income by $1,000
  • Certain companies have performance targets which must be met before shares become available to employees through an employee share scheme
  • Tax concessions may be available where shares are held for a certain number of years after acquisition
  • A tax-deferred employee share scheme may be available up to $5,000 per tax year through a salary sacrifice arrangement (subject to certain conditions being met).

You should seek independent taxation advice specific to your circumstances, before entering into an employee share scheme.

To find out more about online trading, call us on 1800 013 034.

Related products

New clients

Monday to Friday 8am – 6pm (Sydney time)

1800 013 034

Existing clients

Monday to Friday 8am – 6pm (Sydney time)

1800 098 648

Apply online

Open an account online today. 

Additional information

Macquarie Bank Limited ABN 46 008 583 542 AFSL & Australian Credit Licence 237502 (MBL). This information does not take into account your objectives, financial situation or needs. Before making any financial investment decision or a decision about whether to acquire any product mentioned on this page, a person should obtain and review the terms and conditions relating to that product and also seek independent financial, legal and taxation advice.

Macquarie does not purport to give any taxation advice. The taxation discussion in this document is based on laws current at the time of writing. Those laws and the level of taxation may change. The application of taxation laws to each investor depends on that investor’s individual circumstances. Accordingly, investors should seek independent professional advice on taxation implications before making any investment decisions.

Unless stated otherwise, this information has been prepared by Macquarie Bank Limited ABN 46 008 583 542 AFSL & Australian Credit Licence 237502 and does not take into account your objectives, financial situation or needs. Before making any financial investment decision or a decision about whether to acquire a credit or lending product, a person should obtain and review the terms and conditions relating to that product and also seek independent financial, legal and taxation advice. All applications are subject to Macquarie’s standard credit approval criteria.