Employee share schemes
An employee share scheme is an arrangement for issuing or transferring shares in a company to past, present and future employees. The arrangement must be connected to the person's employment or service. The employee share scheme definition includes transfers to directors or shareholder-employees in a company, the transfer of shares in a group company and transfers to associates.
The Commissioner has published a number of items on the topic of employee share schemes. This overview sets out these items organised by the following headings:
The Commissioner issues different types of guidance items to cater for different customer needs. The different types of items are explained on About our publications.
Income tax – general principles
| Title | Summary | Date issued |
|---|---|---|
|
What an ESS is, the taxing date and apportionment IS 24/XX |
This IS explains when an ESS exists and when the share scheme taxing date (SSTD) arises. It addresses when the SSTD arises if the issuing of shares is delayed or shares are not yet in existence and how benefits are apportioned when an employee retires early and retains their benefit. Not yet published - see draft item consulted |
NA |
|
Deductions for parties to employee share schemes IS 24/07 |
This interpretation statement considers what deductions employers can claim for income tax in relation to employee share schemes. It explains the need to satisfy the general permission and when the capital limitation might apply. |
22 Aug 2024 |
|
QB 21/04 |
This question we’ve been asked answers the following question: When an employer is party to an employee share scheme, when does an employer’s expenditure or loss under s DV 27(6) or income under s DV 27(9) arise? | 18 May 2021 |
|
Trustee of employee share scheme trust treated as nominee IS 24/04 |
This interpretation statement considers the available subscribed capital, treasury stock and dividend implications of a trustee of an employee share scheme holding shares as nominee. | 12 Jun 2024 |
|
BR Pub 23/07 |
This ruling considers when the provision of cryptoassets to an employee will constitute an employee share scheme in respect of which an employee derives a taxable benefit that is employee income under s CE 1(1)(d). Applies from 1 December 2022. |
15 May 2023 |
Employer obligations
| Title | Summary | Date issued |
|---|---|---|
|
Employer obligations for employee share scheme benefits paid in cash IS 24/05 and Fact sheet |
This interpretation statement explains an employer’s PAYE, student loan and KiwiSaver obligations when an employee receives a benefit under an employee share scheme that is paid in cash. |
30 Jul 2024 |
|
PAYE – How an employer funds the tax cost on an employee share scheme benefit IS 24/06 |
This interpretation statement explains an employer’s withholding and reporting obligations related to PAYE, student loans and KiwiSaver if an employer wants to fund the cost of tax (and student loan, if applicable) on an employee share scheme benefit provided in shares. |
30 Jul 2024 |
|
Fringe benefit tax - employee share loans and associates QB 24/03 |
This question we’ve been asked explains whether the employee share loan exclusion from fringe benefit tax can apply when an associate of the employee enters into a loan to acquire shares in connection with the employee’s employment. | 12 Jun 2024 |
Valuation
| Title | Summary | Date issued |
|---|---|---|
|
Determining the “market value” of shares that an employee receives under an employee share scheme CS 24/01 |
This Commissioner’s statement provides guidance on working out the market value of a share benefit that employees receive under an employee share scheme. |
31 July 2024 |
Specific cases
| Title | Summary | Date issued |
|---|---|---|
|
Employee Share Scheme – right to receive shares TDS 24/08 |
The main issue considered in this TDS was whether the “share scheme taxing date” was when the rights vested or when the Taxpayer exercised the rights. | 30 Apr 2024 |
|
BR Prd 23/07 |
This Ruling explains some tax implications of the transfer of shares in Qantas Airways Limited to New Zealand resident employees of the Qantas Group under the Employee Recovery Retention Plan. Applies 1 April 2023 to 31 March 2024 |
13 Dec 2023 |
|
TDS 24/24 |
Income tax: Employee share scheme; vesting of shares to participants; share scheme taxing date | 18 Dec 2024 |
Other resources
| Title | Summary | |
|---|---|---|
| General information on the IR website explaining implications and obligations for employees and employers party to an employee share scheme. | ||
| Employer’s Guide | The Employer’s Guide (IR 335) contains information to help you with your responsibilities as an employer, including a section on employee share schemes at page 40. |