Tax will generally be at exercise unless the shares issued at exercise are subject to genuine restrictions on disposal, in which case tax is deferred until the restrictions lapse.
If taxed at exercise, the taxable amount will be the difference between the market value of the shares at exercise (as determined under Australian tax law) and the exercise price.
Tax on sale. If shares are held for at least 12 months, 50% of capital gain excluded from tax.
NOTE:
Generally, if sale occurs within 30 days of taxable event, sale will be considered relevant taxable event and sale price will be used in determining the taxable amount, with no additional gain/loss on the sale.
May be allowed if the subsidiary reimburses the parent under a written agreement and certain other conditions are met.
Please contact Baker McKenzie for details.
Income Tax:
Employers required to report taxable events to the tax authorities and the employee after the end of the tax year (June 30).
Withholding required only if employee tax ID not provided.
Social Insurance Contribution:
Yes, Medicare Levy (including possibly a Medicare Levy surcharge) (employee only). No withholding obligation for levy/surcharge.
Payroll tax (employer only) applies to option income in all Australian states and territories. Generally, payroll tax due at grant, although in all states and territories, employer may elect to pay tax at exercise of options.
Prospectus generally required unless exempted under Division 1A of Part 7.12 of the Corporations Act 2001 (Cth) ("Division 1A of the Act”), statutory exemption or specific relief obtained. If exempted under Division 1A of the Act, an Offering Document containing certain prescribed information must be provided to award recipients and certain other conditions must be met.
Please contact Baker McKenzie for details.
Shareholders of Australian subsidiary may have to approve special termination benefits provided to directors of the Australian subsidiary.