Employee Share Schemes (ESS) let employees acquire shares or options in their employer at a discount to market value. The tax treatment in Australia depends on the scheme type and the 'taxing point' — the moment the discount becomes assessable income. The ATO recognises three main scheme types: upfront-taxed, deferred, and the ESS startup concession (for eligible early-stage private companies).

Under the upfront-taxed scheme, the market-value discount is included in your taxable income in the year you receive the shares. A $1,000 reduction is available if your adjusted taxable income is under $180,000 and the scheme satisfies certain conditions (broadly available, hold for 3 years, no immediate disposal). Under the deferred scheme — used by most listed-company stock-option plans — the discount is taxed at a later 'deferred taxing point' (typically vesting, exercise, or sale, capped at 15 years). The startup concession defers all income tax to a CGT event on sale, with the 50% CGT discount available if held over 12 months.

This calculator computes the income-tax cost at the taxing point — the marginal income tax on the discount value, integrated with your other salary income. Post-vesting price changes are treated as CGT on eventual sale and not modelled here. Note that ESS interests granted from 1 July 2022 onwards have removed the 'cessation of employment' deferred taxing point — leaving your employer no longer triggers tax in deferred schemes for grants after that date.