Employee Share Scheme Lawyers

Employee share schemes can be a valuable way for businesses to reward and retain staff, and for employees to share in the growth of the company.

Our Employee Share Scheme Lawyers advise both employers and employees on how these schemes work, the tax consequences and the legal obligations involved.

The rules are complex, with detailed requirements under the Income Tax Assessment Act, Corporations Act and ATO reporting regime. We provide clear, practical advice to help you design or evaluate a scheme, protect your interests, and make confident decisions.

What is an employee share scheme?

An employee share scheme (ESS) is a program that allows employees to acquire shares or options in the company they work for, often at a discount or with favourable terms.

ESS interests are defined in Division 83A of the Income Tax Assessment Act 1997 (Cth) as either:

Shares – direct ownership of shares in the company, issued upfront or on satisfaction of conditions; or
Options – rights to acquire shares in the future, usually subject to vesting and performance conditions.

For employees, participating in an ESS can create the opportunity to benefit directly from the growth in the company’s value. For employers, ESS can help attract, reward and retain talent while aligning employee incentives with long-term business success.

How are employee share schemes taxed?

Tax is a key factor in designing or participating in an ESS. The rules in Division 83A set out two broad categories:

Upfront taxation – the employee is taxed on the discount in the year they acquire the shares or options, with the value included in their assessable income.
Deferred taxation – taxation is postponed until a later “taxing point”, such as when shares or options vest, are exercised, or are disposed of.

For employees, the difference between upfront and deferred taxation can significantly affect whether participation is financially worthwhile. For employers, structuring the scheme correctly is critical to ensure tax deferral is available, making the scheme attractive to staff.

We explore this in more detail in our Guide to tax deferral for employee share schemes.

What concessions are available?

Special rules exist for eligible start-ups and early-stage companies under the ESS start-up concession.

If the scheme qualifies, employees may acquire shares or options at a discount without triggering upfront tax, provided strict conditions are met (for example, the company’s age, turnover, and unlisted status).

For employees, this means a greater potential upside with fewer immediate tax consequences. For employers, it creates a powerful incentive to attract and retain key staff in competitive markets.

You can read more about this in our Guide to the start-up concession for employee share schemes.

What are the compliance obligations?

Both employees and employers need to be aware of the compliance rules surrounding ESS:

Employers must comply with disclosure obligations under the Corporations Act 2001 (Cth), which set out what information must be provided to participants when shares or options are offered. They also have annual reporting obligations to the Australian Taxation Office (ATO) under the Taxation Administration Act 1953 (Cth), including providing ESS statements to participants.
Employees need to report ESS interests in their income tax returns, whether taxed upfront or deferred. Understanding when the taxing point occurs is essential to avoid unexpected liabilities.

Failing to comply with these obligations can lead to penalties or adverse tax consequences. Employers should ensure their ESS documentation and reporting is correct, and employees should seek advice before making decisions about participation.

Protecting Careers, Strengthening Workplaces

Employee share schemes should reward, not confuse. We advise on structure, compliance and fair treatment so you can maximise your benefits.

Further Workplace Solutions

Why seek advice on employee share schemes?

Early advice helps you protect your position, choose the right pathway, and move forward with confidence.

Get the Structure Right

The choice between shares, options, or hybrid arrangements has different tax and legal consequences. We help employers design workable schemes and employees understand exactly what they are being offered.

Protect Your Tax Position

For employees, ESS tax timing can make a big difference to take-home value. For employers, incorrect structuring can lead to lost concessions or unattractive offers. We provide strategies to minimise adverse tax outcomes.

Ensure Compliance

Both employees and employers have obligations under tax law and the Corporations Act. We guide you through reporting, disclosure and valuation requirements so you meet your obligations and stay protected.

Make Informed Decisions

For employees, accepting or rejecting an ESS offer is a significant financial decision. For employers, implementing a scheme is a strategic business step. We provide clear, plain-English advice so you understand the risks, benefits, and alternatives.

We’re here to help you navigate ESS with confidence

Whether you are weighing up an ESS offer as an employee or implementing a plan as an employer, we make the rules clear and the process straightforward. Our role is to protect your interests, reduce risk, and give you confidence in your decision.

Why choose us for your employee share scheme?

Choosing the right lawyer can make all the difference to the success of your employee share scheme. We combine technical expertise with a practical, client-focused approach to achieve the best outcomes.

Expert Guidance

Our team has in-depth knowledge of the laws that govern employee share schemes. We advise on how these laws apply in practice, explain them in plain English, and help you understand your rights and obligations before you make important decisions.

Proven Solutions

We have experience acting for both employees and employers in relation to ESS arrangements. For employees, we review offers and explain the tax and legal implications so you know exactly what you are signing up for. For employers, we design ESS documentation to ensure schemes are attractive to staff while remaining compliant.

Practical Support

Employee share schemes often require input from more than just lawyers. We work closely with valuers and accountants to ensure the scheme is both commercially sound and legally compliant. This collaborative approach means you get holistic support that covers all aspects of employee share schemes.

Transparent Fees

We know cost is an important factor. That is why we provide upfront guidance on fees, offer staged work where appropriate, and keep you informed about costs at every step. Our transparent approach ensures you remain in control of your legal spend while still receiving high-quality advice.

Client Testimonials

I reached out to Axe Legal when my company offered me shares under an employee share scheme, but I had no idea how it would affect my tax. Boris explained the difference between upfront and deferred taxation and identified that I qualified for the start-up concession. His advice saved me a significant amount in tax and gave me complete clarity on what I was signing. I can’t thank him enough for making a complex issue easy to understand.

We engaged Axe Legal to design an employee share scheme for our growing tech company. Boris helped structure it under the start-up concession, coordinated with our accountant and ensured the documentation met legal requirements. The process was smooth, and the scheme has been a great success in retaining key staff. Axe Legal’s technical knowledge and commercial approach were invaluable.

Boris helped me review an ESS offer from my employer that included complex vesting and option terms. He explained every clause in plain English, flagged potential tax timing issues and suggested changes that protected my position. His advice meant I entered the scheme with confidence, knowing there would be no surprises at tax time. Truly professional and practical guidance.

Our business wanted to roll out an employee share plan but needed to make sure it was compliant and fair. Boris handled the entire process, from drafting plan rules to liaising with the ATO on reporting obligations. He gave us templates, compliance checklists and clear explanations of our duties under the law. The advice was thorough and tailored and I’d absolutely recommend Axe Legal to other employers.

When I left my employer, I was unsure what would happen to my unvested options. Boris reviewed the ESS rules and my employment contract then negotiated a fair outcome so I could retain part of the benefit. His mix of legal precision and practical strategy turned what could have been a loss into a win. I was genuinely impressed by how much value he added in a short time.

I sought advice from Axe Legal after receiving an ESS offer that seemed too good to be true. Boris carefully reviewed the documents, explained the tax deferral rules and confirmed that the offer didn’t actually qualify for the concession. Thanks to his advice, I avoided a costly tax trap. It’s rare to find lawyers who combine deep tax knowledge with clear, honest communication.