THE EXEMPT SHARE PLAN

The Exempt Share Plan (ESP) provides a $1,000 per annum, income tax exemption provision under Division 83A. Under this plan, participating employees never pay tax on the $1,000 discount on the Shares and pay only concessional Capital Gains Tax on any gain made on the sale of Shares.

While the ESP may be criticised for the limited exemption of $1,000 per annum, it remains the most tax effective Employee Share Plan mechanism on the Australian market.

EMPLOYER TYPE

• Public Companies.
• Private Companies (in some cases).

STRATEGY

• Wider Employee offering.
• Wealth Creation.

ADVANTAGES

• Is simple to explain.
• Complies with all the legislative and tax requirements.
• Meets prospectus relief requirements.
• The Shares are a tax exempt benefit, only subject to CGT or on any gain on sale over $1,000.
• Gives Employees full rights to their Shares.
• Does not involve the problem of downside risk which occurs with loan plans.
• Fully outsourced administration.