After a long consultation period, and a delay caused by 2017 election, the IRD’s new rules on the taxation of employee share schemes came into effect on 1 April 2018.
(Access our free ESOP template here.)
Companies will no longer be able to structure share purchase schemes to have the economic effect of options, while treating increases in the value of shares issued under those schemes as tax free capital gains. Instead, share purchase schemes involving limited recourse loans, partly paid shares and other risk free devices will have gains taxed on the same basis as options.
In practice, this means that:
We will discuss some of the technical detail in later blogs. A few points to be aware of in the meantime:
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