[benjaminRRR]

Australia makes it incredibly difficult to give equity to your employees - they literally get double punished and it's often better for the employee not receive. The Australian Taxation Office will charge on receipt.

So you get 1% of the company and it's last investment round was $10M - Boom you get a $100,000 tax bill that year! Even though it's all only paper value.

Then if you do liquidate you're taxed again on the gain!

It's a huge problem and there are a lot of folks in the startup community trying to get it rectified.

[anilgulecha]

Isn't options the default rather than a grant? The tax should only apply on exercising/liquidation.

[1stop]

That's not true. The company gets 10M. The shareholder still received nothing, and thus has no tax liability.

When the shareholder sells their shares they will be taxed.

I don't understand your scenario at all... :\

[tim333]

His scenario was the company raises at 10M and afterwards gives 1% of it's shares to the employee. Actually I think most countries would treat that as taxable income which is why companies usually give options not shares once they get going.

[1stop]

That is still not a taxable event. Even if it's shares and not options.

The shares won't be taxed until they are sold.

I know this, because I've worked in an Australian company and been given shares and they made no difference to my tax liability.