Employee share options tax treatment
You are free to copy, adapt, modify, transmit and distribute this material as you wish but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products. In practice, however, redemption and taxation of these instruments can be quite complicated. Equity compensation can be a lucrative benefit that shouldn't be overlooked at retirement. The cash flow comes when the company issues new shares and receives the exercise price and receives a tax deduction equal to the "intrinsic value" of the ESOs when exercised. This cost is recognized over the requisite service period with a corresponding credit to Employee Stock Options Outstanding account.