* And by "Thoughts?", I mean, "does anyone have any relevant thoughts
on the Australian Federal Government's taxation regime of options and
its reform"
I received options in a startup we did in the 90's, and the rules then
depended
on the vesting price. I.e. if your company's shares were currently
valued at
$20, and the options has the same exercise price, there was no tax on
option
issuance. You paid tax on any growth of course, which I think was the
difference
between current valuation and exercise price at the time of exercise.
Some options I received were at a "nominal" exercise price and some at
the
current estimated valuation. Obviously the latter were preferred, as
the former
incurred tax just on receiving options, whether you ever exercise them
or not.
Obviously if they later get revalued at $nil (as happened), you have a
tax
rebate, but it's all bookwork.
At some prior time, I believe the rules were even more liberal; you
just paid
CGT when you sold the shares, and the cost base was just the exercise
price.
There was no tax on issuance or on exercise.
The trouble with all this of course is how do you value the company?
If you
exercise options in an unlisted company, there's no market to
establish the
value. But apart from that, I thought the rules were quite reasonable,
and
employee options schemes were worthwhile.
Anyhow, that was the situation before the last round of changes. In
this context,
can someone clarify what the changes were, and when tax is payable?
Clifford Heath.
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