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Employee share schemes
Employee Share Scheme Advice
Your shares might be worth $1M, $2M, even $5M. But nobody has told you what to do with them.
I help tech execs turn RSUs, ESPP shares and options into a plan. One that pays the tax, cuts the risk and funds an earlier retirement.
General information only. Not personal advice.
Who this is for
Shares from a US tech company? This is for you.
Almost all my clients work for US listed tech companies. Most have RSUs. Many also buy shares through an ESPP. Some hold options in a company that hasn’t listed yet.
The common thread is simple. A big chunk of their wealth is in one company, and there’s no plan for it.
When to get advice
- You’ve started a new job with a big grant and a 3 or 4 year vesting schedule
- Your stock has run 30%, 50%, even 100% in a year
- Your stock has fallen hard and you’re anxious about selling
- You’ve been sitting on a big holding for years, not sure what to do
RSUs
Your vest date is a tax date
Under the ATO’s employee share scheme rules, RSUs are generally taxed as income when they vest, not when you sell. On a $200K vest at the 47% top rate, that’s around $94K of tax. Often nobody withholds it for you.
My starting point, from my RSU Playbook: sell 50% to 70% of every vest to de-risk.
Over time, the goal is to hold no more than 33% of your wealth in one stock. You don’t need to get there overnight. Selling at different points in the market cycle gives you an average price and steadily cuts the risk.
For the full detail on RSU tax, see my RSU advice page and the free RSU Playbook.
ESPP
Employee share purchase plans: a no brainer, or not?
An ESPP lets you buy company shares through payroll, usually at a discount. Many plans give 15% off. Some plans set the purchase price so far below today’s share price that the real discount is much bigger. Many US plans let you buy up to US$25,000 a year, roughly A$40,000.
When the discount is big, buying and selling straight away to lock it in can be close to a no brainer. The discount is generally taxed as income in the year you buy.
But it’s not for everyone. If the stock has been falling, or you already own too much of it, more shares may be the last thing you need. You also need the cash flow to fund it.
So I look at it case by case: the purchase price you’re getting, the stock’s history, your cash flow and your risk profile. Then I review it regularly with ongoing clients.
Share options
Options in a company that hasn’t listed yet
Pre IPO options can be worth a lot, or nothing. The value only becomes real when there’s an exit: an IPO, or a sale to private equity or another company.
So we start with the timeline. How long until a possible IPO? Is private equity involved? How long are you prepared to wait?
Options have their own tax timing rules, so we work through them with your accountant before you exercise anything.
My process
From a pile of shares to a plan
- Map everything. In our first meeting I ask two questions. What are your vested shares worth? What are your unvested shares worth? Then we map every grant and vest date.
- Work out the tax. We estimate the tax on every upcoming vest and on any sell down.
- Build a sell down plan. A planned sequence that cuts concentration risk without one huge tax bill.
- Put the money to work. Pay down the home loan. Use the equity for a diversified ETF portfolio. Add to super, including non concessional contributions.
- Stay on it. We check in at least twice a year. Our new vest tracking software flags every upcoming vest, so we can plan before it lands.
Timing
A smart sale can buy you 18 months
Sell a big holding early in the financial year, and the tax may not be due for up to 18 months. That’s especially true if you’re not on PAYG instalments.
In the meantime, the money doesn’t sit idle. We often park it in your offset, cutting interest on your home loan until the tax is due. And if you still have unvested shares, we can plan to sell some as they vest to fund future tax bills.
2026 Budget: from 1 July 2027, the 50% CGT discount is replaced by indexation and a 30% minimum tax on real gains. Gains made before then keep the 50% discount, so your sell down timing matters even more.
Client example
Seeing this in practice
A VP at a global tech company, mid 40s. $3.8M in company shares and a $5M home.
Here’s how a sell down like his plays out. Selling 70% releases about $2.66M. After roughly $800K of tax, the rest goes to the mortgage and into super. The concentration risk falls dramatically, and the money starts working towards $25K a month in retirement.
Read the full case study or browse all case studies.
Illustrative only. Results depend on your circumstances. Details changed for privacy.
Why work with me
It’s not about the shares. It’s about what they can do for you.
I don’t pick individual stocks. For the investments themselves, we use professionally managed portfolios run by MLC Asset Management.
What I do is give your shares context. My Early Retirement Blueprint models your assets 5, 10 and 15 years out. It shows what selling means for your retirement income, so you can decide with confidence.
I’ve seen clients in their 50s and early 60s with one big vesting schedule ahead of them. Sell, invest properly, and they become financially independent.
From there, the shares often lead to the next steps: debt recycling, restructuring loans and building super.
I don’t give advice on US tax. Where you have US tax questions, we work with a specialist.
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Questions
Frequently Asked Questions
How are employee shares taxed in Australia?
Generally as income at your taxing point, which for RSUs is usually when they vest. Any growth after that is a capital gain when you sell.
Should I sell my RSUs as soon as they vest?
Usually a good part of them. My rule of thumb is 50% to 70% of every vest, with no more than 33% of your wealth in one stock over time. The right amount depends on your situation.
Is an ESPP worth it?
Often, when the discount is large. Not if the stock has been falling, you already own too much of it, or your cash flow is tight.
What happens to my shares if I leave my job?
It depends on your plan. For grants made since 1 July 2022, leaving your job generally no longer triggers the tax on unvested shares. Check your plan rules.
Do you give US tax advice?
No. We focus on Australian tax and your overall plan, and work with US tax specialists where needed.
Plan before the vest, not after
Ready to turn your shares into a plan?
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