ESS tax issues

Employee Share Scheme tax bill?

Received an ATO bill for Employee Share Scheme income or RSUs in Australia? It is worth checking before you assume the amount is correct. Sydney's Chartered Accountants since 1975.

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Employee Share Scheme income can be reported through ESS statements, employer reporting, prior-year returns and amended assessments. In some cases the issue is straightforward. In other cases, the income may have been included in the wrong year, reported more than once, or affected by a deferred taxing point.

Chatswood Taxation Consultants can review the documents and help you work out what happened.

Common employer ESS scenarios we review

ESS tax issues concentrate at employers where five-to-ten-year staff routinely sit on six-figure-plus share positions. By the time the ATO data-matches a return, a single year's RSU vesting, ESPP cycle or deferred-taxing-point event can be the largest line on the bill. Common employer contexts in this work — and the proprietary share-plan terminology each uses — include:

Australian tech and finance

  • Atlassian — RSUs under the 2015 Share Incentive Plan; deferred taxing-point timing
  • Canva — pre-IPO ESOP options, Employee Share Sale (secondary tender) proceeds
  • Macquarie Group — MEREP shares, DPS Plan notional fund exposure, multi-year deferred profit share
  • WiseTech Global — Employee Incentive Scheme share rights, IAYE (Invest As You Earn) shares
  • Block (Afterpay → Square) — Block RSUs including Afterpay-to-Block rollover from the 2022 acquisition (0.375 exchange ratio)
  • Xero — Restricted Stock Unit and Option Plan
  • REA Group — Long-Term Incentive performance rights
  • CSL — GESP (Global Employee Share Plan), Performance Rights, PSUs
  • Cochlear, ResMed — global employee share plans, Matching Rights, performance rights

Global tech with Sydney offices

  • Google (Alphabet) — GSUs (Google Stock Units), ESPP, multi-tranche vesting
  • Microsoft — On-Hire Stock Award + Annual Stock Award (RSUs), ESPP
  • Amazon — RSUs on the 5/15/40/40 back-loaded vest, single-year tax shocks in years 3-4
  • Meta — RSUs under The 2012 Plan, initial grants + refreshers
  • Apple — RSUs and ESPP discount cycles
  • Salesforce — RSUs and ESPP combinations
  • Adobe — RSUs and ESPP combinations

We work with individuals — employees, executives and contractors — at these and many other companies. Not the companies themselves. If your employer issues shares, RSUs, options, performance rights or matching rights, we can review the tax position regardless of the scheme structure.

What we can check

  • Your Employee Share Scheme statement
  • The ATO assessment or amended assessment
  • Whether ESS income appears to have been counted twice
  • Whether the issue affects one year or multiple prior years
  • What information is needed before an amendment or objection is considered

This is especially useful if you worked for a company that issued shares or rights, received a sudden ATO bill, or are catching up on overdue tax returns that include ESS income.

What to bring (or send through)

The ATO notice, your ESS statement, payslips if relevant, and the tax returns or assessments for the affected years. We will review the position and explain the next practical step.

Frequently asked

ESS tax bill questions

Why did I receive an ATO bill for Employee Share Scheme income?
ESS income can arise when shares, rights or options are taxed under the Employee Share Scheme rules. The timing can depend on the type of scheme and whether there is a deferred taxing point. If the ATO receives ESS information that was not included correctly in your return, it may issue an amended assessment or tax bill.
Can ESS income be counted twice?
It can look that way in some situations, especially where prior-year returns, employer ESS reporting and amended assessments do not line up. The answer depends on the documents. Do not ignore the bill, but do not assume the first number is automatically right either.
Do I have to deal with the ATO myself?
No. Once you engage us, we handle ATO communication on your behalf — responding to letters, requesting more information, lodging amendments where appropriate, and putting forward your position. If the ATO contacts you directly, you can tell them you have a registered tax agent acting for you and refer them to us. You bring the documents; we deal with the ATO.
What should I bring?
Bring the ATO bill or amended assessment, your Employee Share Scheme statement, any employer share-plan documents you have, and copies of the affected tax returns or notices of assessment.
I'm no longer an Australian tax resident — do I still owe tax on my Employee Share Scheme income?
Often yes. ESS income that crystallised while you were an Australian tax resident generally remains taxable in Australia, even if you have since moved abroad. Whether the deferred taxing point was triggered before or after your residency change matters, as does the source treatment of any later sale. We review these positions regularly for clients who relocated after vesting at Australian or global employers with Sydney offices.

Bring it in. We'll work through it with you.

Chartered Accountants in Chatswood, Sydney since 1975. Frank Hong, FCA, JP — Principal Accountant.

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