Does my business meet the requirements to be eligible for the start-up tax concession for my Employee Option Plan?
There are two main parts to know if your start-up is eligible for the start-up tax concessions.
- The company needs to fit the criteria of being a startup
- The options need to qualify for the concessional tax treatment
Is my business considered a start-up?
To be defined as a start-up, a business must, at the time of the grant:
- Be an Australian company
- Be privately held, ie. not be a publicly-listed company
- Has been incorporated less than 10 years ago (and does not belong to a group that has been incorporated more than 10 years ago)
- Has a group turnover lower than $50 in the prior financial year
Do the options qualify to receive a start-up tax concession?
The Options must meet the following rules to qualify for a start-up tax concession, at the date of grant:
- The option price must at least be equal to the market value of the shares
- The options and/or shares cannot be sold within 3 years
- The beneficiary cannot hold more than 10% of the company’s total shares
We encourage companies to seek legal advice to ensure it meets the qualifying criteria to receive start-up tax concession.