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Employee share schemes and corporate transactions
Published on 01 Feb 20 by "THE TAX SPECIALIST" JOURNAL ARTICLE
This article considers the employee share scheme (ESS) tax issues that arise in the context of corporate transactions. The focus of the article is on demerger transactions, but the core principles are generally applicable to other corporate transactions, including takeovers, divestments and initial public offerings. While it should be possible to achieve sensible tax outcomes for employees, there are a number of traps and counterintuitive rules that companies need to be aware of when planning for the transaction. The first part of the article explains the core ESS rules that are likely to come into play on a demerger transaction. The second part of the article considers the consequences of a demerger on ESS interests in the form of rights to acquire shares. The third part of the article briefly considers the consequences of a demerger on ESS interests in the form of beneficial interests in shares. The fourth part of the article considers the interplay between ESS interests and shareholders’ entitlement to CGT roll-over relief and the demerger dividend exemption.
Author profile
Shaun Cartoon FTI
Shaun Cartoon, FTI is a partner in Arnold Bloch Leibler’s tax practice. He advises a range of clients, including ultra-high-net-worth individuals, ASX listed companies and large private groups. Shaun’s practice includes a specialty advising on ATO audits and disputes, taxation of offshore assets and structures, issues and disputes concerning tax residency and asset protection. - Current at 09 July 2025
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