• No tax to be paid on equity benefit.
  • Safe-harbour valuation of equity is easy and usually heavily discounted.
  • Allows for service and performance tests.
  • Likely the most attractive equity plan that is available for both employers and employees in qualifying entities.


  • Only applies to unlisted companies that are <10 yrs. old, and have  <50m turnover.
  • Often no prospect of being able to sell shares – where is the benefit?
  • Options are cumbersome, and SARs are not allowed.
  • Options are considered “contribution plans” subject to disclosure requirements and contribution limits unless limited to “senior managers” (or similar).

About Start-up Concession Plans

In FY16 the Government introduced taxation concessions for ESOPs operated by start-up companies. However, the definition of start-up is narrow and excludes all companies listed on a stock exchange. Nevertheless, if a company qualifies as being a start-up these concessions should be considered, as the tax treatment is favourable, and the plan offers the flexibility of attaching vesting conditions (to options) if so desired.