• Best tax benefit/treatment available: 100% tax discount on the benefit.
  • Creates a broad-based employee ownership opportunity that supports engagement and culture.
  • Can be used as discretionary annual bonus.
  • Can be part funded or fully funded by employee salary sacrifice  to minimise company cost.
  • For many employees, an occasional $1,000 bonus is an effective “thank you”.


  • Cannot be targeted to specific groups of employees due to the “75% offer test”.
  • High company cost if large number of participants and not done as salary sacrifice.
  • If done as salary sacrifice, creates a risk of loss for participants; could “backfire” if shares price falls.
  • No ability to attach performance or service conditions to align the provisions of benefits with achievement of the company’s goals.
  • Low amount of benefit for participants ranging from $300 (approx. tax saving at low marginal tax rate for maximum salary sacrifice) to $1,000 if maximum equity benefit provided by the company).
  • Tax exemption does not apply to employees earning over $180,000 per annum.

About Tax Exempt Plans

One of the most frequently used ESOPs in Australia, a TEP is an ESOP that satisfies specific Australian taxation requirements and enables a company to deliver equity at a discount to its market value to all Australian permanent employees. Discounts of up to $1,000 for each employee each year are tax free, which makes this plan extremely tax effective, be it a relatively small value.