Funding '13A' Share Plans

 Funded by remuneration

Aequum recommends remuneration funding as the most effective method of financing Division 13A Exempt and Deferred share plans.

Remuneration funding means that the employee sacrifices a portion of salary, bonus, or profit share. These funds are then re-allocated by the employer to the share plan which acquires ordinary shares in the employer’s company on behalf of the employee.

Employee benefits

Remuneration funding means that the sacrificed salary (bonus or profit share) is allocated to the share plan on a pre-tax basis. In other words, by investing pre-tax dollars in the ESOP, employees acquire (depending on their marginal tax rate) up to twice the number of shares they could have purchased using post-tax savings.

Employer benefits

Remuneration funding means, for the employer, a tax deduction to the company for every dollar contributed to the ESOP.  A contribution to the ESOP is just like a contribution to wages or superannuation, and as such is a tax-deductible cost of running the business.

Site Menu

Copyright © Aequum