Don't get caught out by new tax rules

If you've been allocated employee shares this financial year, it pays to be aware that from 1 July 2009, the rules have changed significantly.

Generally from this date, you can no longer choose whether you want to be taxed upfront or defer payment to a future financial year.

The shares issued under all plans will now be taxed upfront, unless the plan includes a 'real risk of forfeiture' or the shares are acquired under certain salary sacrifice arrangements.

To find out how you’re affected by the news rules, you should refer to any information sent by your employer or contact the share plan administrator.

If you’ve been impacted by this change and your taxable income is likely to be higher this financial year, the good news is there are some things you can do to manage your tax position. However, you'll need to act now to ensure you realise the benefits this financial year.

For example, if you pre-pay certain expenses (such as interest on a fixed-rate investment loan or premiums on an income protection insurance policy), you could bring forward your tax deduction and pay less tax this financial year.

Another way to reduce your taxable income is to make salary sacrifice or personal deductible super contributions, however you'll need to be mindful of concessional contribution caps to avoid penalties.

To understand if these opportunities are beneficial for your needs - you should seek advice.

Find out more

For more information on how MLC can help you seek advice, or for any other financial advice needs, get in touch with us or call us on 136 652.