How the Plans Work

Exempt and Deferred Share Plans (Remuneration funded)

The company makes regular contributions to a share plan as part of normal remuneration.  Contributions can be funded by sacrifice from any combination of salary, profit shares, and bonuses.   The employer can also make matching offers: e.g. the company offers1 free share for every 3 purchased by the employee.  With these funds the plan purchases the company’s ordinary shares or subscribes to new issues.

Features of Plans

  • Employer contributions, including set up costs, are fully tax deductible.
  • Employer contributions generally do not attract on-costs such as payroll tax.
  • Tax on the benefit for employees is either exempt, or deferred for up to ten years, depending on the type of plan structure used.
  • No limit on amounts subscribed annually to employee accounts under the tax-deferred model.  Tax-exempt plan limited to $1,000 per employee per year.
  • Performance criteria can be built into plans and employee access to plan benefits can be controlled to encourage continued service.
  • Where plans are funded out of remuneration and shares are purchased ‘on market’ the plans can be implemented without AGM approval.

 

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