• This is the ultimate salary sacrifice plan for companies that experience at least moderate Share price growth.
  • Being salary sacrifice it involves no company cost except for set up and administration.
  • Can use Rights or SARs depending upon share price growth outlook.
  • Allows participants to progressively accumulate wealth via salary sacrifice to supplement superannuation.
  • Optimal taxing outcome for participants.
  • Can be applied to as few or as many employee groups as desired (even if they do not meet the usual definition of “sophisticated”).


  • Unprotected salary sacrifice creates a risk of loss for participants; could “backfire” if shares price falls.
  • Salary sacrifice makes the plan a contribution plan for Corporations Act which will trigger onerous compliance/disclosure requirements for unlisted companies (but not onerous for listed companies).
  • Participants need to be sufficiently sophisticated to amend prior year tax returns and assess interest charge risks, unless the Company is prepared to offer a tax return amendment service as part of its administrative arrangements and/or settle in cash, if the share price falls.

About Sophisticated Participants Plans

SPPs can be structured as right or share appreciation right (SARs) plans. They use instruments that are indeterminate rights which simply means that before exercise of a parcel of Rights, the number of Shares, if any, that will be received by the right holder cannot be determined. Perhaps the most commonly used forms of indeterminant rights are SARs and Rights that may be settled in Shares or cash as determined by the board.

Indeterminate rights are not securities for Corporations Act purposes – they are classified as derivatives. However, there is no difference between compliance requirements for securities and derivative under the Corporations Act provisions that came into effect on 1 October 2022 for employee share schemes.

The defining features of these instruments is that they are fully vested at grant, have no vesting conditions (i.e. no risk of forfeiture) and may be sold or exercised at any time. Accordingly, they are not suitable for use as incentives or for retention. They are best used as part of salary sacrifice or in lieu of cash amounts that would otherwise be considered “earned” at the time of grant e.g. bonus settlement.