New Zealand: Proposed tax changes for employee share plans, benefits

New Zealand: Proposed changes for employee share plans

There are proposals for changes to the taxation of employee share scheme (plan) benefits in New Zealand.

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The focus is on conditional and “option-like” arrangements. There are government concerns that under current rules, these employee share schemes allow what otherwise would be taxable income, to be treated as tax-free capital gains. The proposal is to calculate the taxable benefit when the employee holds the shares free from any substantive conditions, rather than simply when the shares are acquired. Because this proposed calculation would be made at a later time, the shares could have potentially increased in value, with a larger taxable benefit. 

The proposals also would: 

  • Provide transitional rules for existing employee share scheme arrangements
  • Allow a deduction for the cost of employee share schemes
  • Defer the taxation of start-up company employee share schemes, to a time when the shares are sold or listed
  • Impose additional employer reporting

 

Read a May 2016 report [PDF 703 KB] prepared by the KPMG member firm in New Zealand: New rules for employee share schemes

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