I have been running my online business for 2 years ago and 6 months ago an old business colleague started helping out with advice. I haven’t been able to pay him a full salary but we’ve spoken about having some equity as a reward and ongoing incentive. Some of the advice relates to him having to pay capital gains tax straight away of the value of the shares. Is this correct and what other options are available?

Hi Jason,

I think that what you are referring to is an Employee Share Scheme (ESS). There are a mountain or rules and regulations and yes there may be some CGT issues to deal with.

https://www.ato.gov.au/General/Employee-share-schemes/

this will help a bit, but in reality you should probably look to talking to someone who can help you set up the scheme and help you manage the scheme.

And this will cost you. The expertise and experience necessary here is not going to be found down at the local ITP shop. If you dont have one already, find yourself a CA or CPA with some experience in this area, and be prepared to pay for advice. It probably wont be cheap, but if a ESS is going to be a good strategy to help you grow your business and retain the best team to get the most out of it, then the cost of the advice is going to look like chicken feed compared to the benefits you get from a properly executed plan.

good luck
bc