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The Payroll tax guide: Shares and options provides detailed information and examples about Employee Share Scheme interests and payroll tax in New South Wales. For more general information read the shares and options page. We advise that you read this guide with:

Chapters

  1. What is an Employee Share Scheme (ESS) interest?
  2. Declaring ESS interest for payroll tax
  3. Calculating wages arising from the grant of a share or option
  4. Restrictions on the disposal of shares and options and other conditions
  5. Consideration paid or given
  6. Shares and options granted in an overseas parent company and exchange rates
  7. Withdrawal, cancellation or exchange shares or options
  8. Rescission, lapse or forfeiture of shares and options
  9. Dividend equivalents
  10. Application of nexus provisions to ESS

9. Dividend equivalents

Dividend equivalents are available in some employee share schemes.

They are payments in amounts equal to the dividend paid on shares to the shareholders for shares that have been allotted to employees but have not vested.

Dividend equivalents:

  • are liable wages for payroll tax under section 13(1) of the Payroll Tax Act 2007 (PTA), and
  • should be declared in each relevant year in which they are paid to employees irrespective of the relevant day elected by the employer.

Dividend equivalent payments made while an employee is providing services in NSW are liable for payroll tax in NSW, even if an employee was overseas at the grant date.