Do delayed vesting shares leave founders with personal tax liabilities? I've struggled to get a clear / detailed answer on this question, despite talking to a bunch of people and searching the SB archives. Here's hoping a few people in the community can help solve it...
Situation: - The founders in a company agree to vest their shares over several years (eg, as outlined in the Startmate docs - http://www.startmate.com.au/financing-docs). - The value of these delayed vesting shares is determined upfront (effectively zero). - At each vesting milestone, the appropriate number of new ordinary shares are issued to each founder. Complication: - Over time, the value of the company increases. Additional preference shares may be issued at a significantly higher price. - At each milestone, the delayed vesting shares are now issued at a price that represents a steep discount to the 'market value'. An accountant has raised a concern with this situation. He suggests that if shares are issued to founders/employees at a discount to 'market value', there will be a personal tax liability for those people in the year of issue. That is, the difference between issue price and market value could be recognised by the ATO as a 'gain', and taxed as such. Question: Do the founders have a problem here, or is there a way around it? Does anyone have actual experience or (informal) advice in this situation? Note, only interested in Australian tax law (not US). Thanks in advance! Michael Overell RecruitLoop mich...@recruitloop.com +61 408 791 984 http://recruitloop.com.au -- You received this message because you are subscribed to the Silicon Beach Australia mailing list. Vist http://siliconbeachaustralia.org for more Forum rules 1) No lurkers! It is expected that you introduce yourself. 2) No jobs postings. You can use http://siliconbeachaustralia.org/jobs To post to this group, send email to silicon-beach-australia@googlegroups.com To unsubscribe from this group, send email to silicon-beach-australia+unsubscr...@googlegroups.com For more options, visit this group at http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en
