Share Purchase Plan (SPP) Tax 2025-26 — ESS Concessions & Reporting (ATO)
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Primary tax-year context: 2025-26
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General information only. This is not tax or financial advice. SPP tax treatment depends on the specific plan terms — get a copy of your plan rules and speak to a registered tax agent before lodging.
A Share Purchase Plan (SPP) lets an ASX-listed company offer existing shareholders up to $30,000 of shares per year at a small discount to market price without a prospectus. For employee shareholders, an SPP is also an Employee Share Scheme (ESS) interest under Division 83A of the Income Tax Assessment Act 1997 — which means the discount is potentially assessable, and specific concessions and disposal rules apply.
This article walks through when the $1,000 upfront reduction kicks in, why the 30-day rule matters on sale, how CGT applies later, and a full worked example for a 2025-26 SPP participant.
What Makes an SPP an ESS Interest
An SPP is an ESS interest if the offer is connected to your employment — for example, you got it because you’re an employee shareholder or the plan terms favour employees. If you received the SPP offer purely as an arms-length shareholder (no employment link), the ESS rules don’t apply and you’re just looking at ordinary CGT on disposal.
Most SPPs issued by listed employers to their employee-shareholders do fall inside Division 83A. Check the offer booklet — if the company has sent you an ESS Statement for that offer, it’s an ESS interest.
Two taxing-point regimes exist under Division 83A:
| Regime | When you’re taxed | Typical SPP |
|---|---|---|
| Taxed-upfront (default) | In the income year you acquire the shares | Most SPPs fall here — no forfeiture / restriction conditions |
| Tax-deferred | Up to 15 years after acquisition, at the earliest deferring-point event | Only if the plan has real disposal restrictions or risk of forfeiture |
The $1,000 Upfront Reduction
If you’re in the taxed-upfront scheme and your adjusted taxable income is less than $180,000, you get to reduce the assessable discount by up to $1,000 (section 83A-35).
To qualify, all of the following must hold:
- You were employed by the issuing company (or a subsidiary) at the time.
- Adjusted taxable income ≤ $180,000 (this is taxable income + reportable fringe benefits + reportable super + net investment loss + total net rental loss − assessable FHSS releases).
- You do not hold (together with associates) more than 10% of the shares or voting rights after acquisition.
- The plan was offered on a non-discriminatory basis to at least 75% of Australian-resident permanent employees with 3+ years service.
If all four are met, the first $1,000 of the total taxable discount across all ESS interests acquired that year is effectively tax-free.
The 30-Day Rule
Under section 83A-115, the ESS deferred taxing point can shift forward to the date you actually sell — if you dispose of the shares within 30 days of what would otherwise have been the taxing point.
For taxed-upfront SPPs, this is less common (acquisition = taxing point). But for tax-deferred SPPs, the 30-day rule matters a lot: if you sell within 30 days of the deferring event, the sale proceeds effectively set your discount and no CGT event arises at a separate market value. Miss the 30-day window and you’re taxed on market value at the deferring event, then pick up the sale separately under CGT.
In short: if you’re in a tax-deferred SPP and you’re going to sell anyway, selling within 30 days of the deferring event simplifies the tax.
Worked Example: $10,000 SPP in 2025-26
Meet Jess. She’s a salaried engineer earning $140,000, working for a listed company. In September 2025 she participates in an SPP:
- SPP offer price: $22.00 per share
- Market price on allotment date (3 Oct 2025): $24.50 per share
- Jess takes up 455 shares ($10,010 outlay)
Discount on acquisition:
455 × ($24.50 − $22.00) = $1,137.50
Because the SPP is a taxed-upfront ESS and Jess’s adjusted taxable income is under $180k, the $1,000 reduction applies:
| Item | Amount |
|---|---|
| Gross discount | $1,137.50 |
| Section 83A-35 reduction | −$1,000.00 |
| Assessable ESS income 2025-26 | $137.50 |
Jess declares $137.50 at label D of her 2025-26 tax return (ESS total) — her employer’s ESS Statement (due to her by 14 July 2026) will show the gross discount figure and the eligible reduction.
CGT Cost Base Step-Up
A critical and often-missed point: the cost base of her SPP shares steps up by the discount that was taxed. Her acquisition cost for CGT purposes is not $22, but $24.50 — the market price on the taxing point — because Division 83A-125 resets the cost base to market value so she isn’t taxed twice on the same discount.
Later Sale
In November 2026 — more than 12 months after acquisition — Jess sells all 455 shares for $28.00 each = $12,740.
Capital gain calculation:
| Item | Amount |
|---|---|
| Sale proceeds | $12,740 |
| Cost base (455 × $24.50) | $11,147.50 |
| Brokerage (both sides) | $60 |
| Gross gain | $1,532.50 |
| 50% CGT discount (held >12 months) | −$766.25 |
| Net assessable gain 2026-27 | $766.25 |
At her 37% marginal rate + 2% Medicare, Jess’s total tax across both years on the SPP is roughly:
| Year | Taxable item | Tax (39%) |
|---|---|---|
| 2025-26 | $137.50 ESS | $54 |
| 2026-27 | $766.25 net gain | $299 |
| Total tax | $353 |
On a $2,730 gross pre-tax gain (discount + price rise) that’s an effective 13% rate — the $1,000 ESS reduction plus the 50% CGT discount did the heavy lifting.
Check your own numbers with the ESS calculator and the capital gains tax calculator.
Reporting Checklist
| When | What | Where |
|---|---|---|
| By 14 July 2026 | ESS Statement from your employer | Direct to you + ATO |
| When lodging 2025-26 | Declare assessable ESS discount at label D | Individual tax return |
| When lodging year of sale | Capital gain/loss at item 18 | Individual tax return |
| Keep | Offer booklet, allotment notice, CHESS confirmations, brokerage invoices | Records kept 5 years from sale |
If your employer didn’t send you an ESS Statement but the SPP clearly was employment-linked, contact their share-registry or ESS administrator — you still have to report.
Tax-Deferred SPPs (Less Common)
If the plan has real restrictions — for example, a minimum holding period backed by forfeiture, or trading windows tied to employment — it may be tax-deferred. In that case the taxing point is the earliest of:
- The restrictions lifting (and no real risk of forfeiture)
- Cessation of employment
- 15 years from acquisition
At the deferring event, market value minus cost price = assessable discount. The 30-day rule can then override the deferring-event price to use the sale price instead, if you sell within 30 days.
Frequently asked questions
Q: Do I pay tax even if the SPP issues at no discount to market? If the SPP issues at or above market price there is no discount and therefore no assessable ESS amount. Only CGT on eventual sale. Check the allotment-date market price carefully — it’s the VWAP over a defined window, not the trading-day close.
Q: What if the share price falls below the SPP price before allotment? Many SPPs include a “lower of” mechanism — you pay the lower of the fixed price or a discount to VWAP. That’s fine for tax: the final issue price sets the base, and the market-price-at-taxing-point still determines the discount.
Q: What if I already own >10% as a shareholder? You fail the 10% threshold test and lose the $1,000 reduction — the full discount is assessable. But you can still use the CGT 50% discount on later sale if held >12 months.
Q: Can my spouse also participate and get their own $1,000 reduction? Yes — if they separately qualify (employed by the issuer, income under $180k, <10% ownership including associates). The $1,000 is per-individual, per year.
Q: What if I bought SPP shares as a non-employee shareholder? Then Division 83A doesn’t apply — you weren’t granted the interest because of employment. Your cost base is simply the SPP issue price and you’ll pay CGT (with 50% discount if held >12 months) on disposal. No ESS reporting.
Sources
- ATO — Employee share schemes
- ATO — ESS taxed-upfront scheme with $1,000 reduction
- ATO — ESS deferred taxing point and 30-day rule
- Income Tax Assessment Act 1997 — Division 83A
Model your SPP outcome before lodging
Use the ESS calculator to test the $1,000 reduction against your income, and the capital gains tax calculator to project the CGT side of the eventual sale. SPPs stack well with the 50% CGT discount — but only if you hold for 12 months and keep your cost-base records straight.