Is my start-up eligible for the start-up tax concession for my Employee Option Plan?

B3GIN Team
14/03/22
B3GIN - Employee stock-options Australia

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To be eligible for a start-up tax concession, the company needs to be defined as a start-up and the options granted must follow some criteria

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. 

  1. The company needs to fit the criteria of being a startup
  2. 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.

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