Turn Share Price Uncertainty Into a Strategic Tax Advantage
A falling share price may cause concern, especially when it directly affects the value of your Executive Share Scheme (ESS) holdings. However, a share price dip isn’t necessarily a setback for executives and professionals in the mining and resources sector — it’s potentially an opportunity.
If your company’s share price has recently dropped, this may be the perfect time to take advantage of the lower value by restructuring how and where your vested shares are held. Done correctly, it can significantly reduce your future tax burden, protect your wealth from future legal liability, and position you for greater flexibility and financial security.
In this article, we explore the practical ways you can take control of your ESS during periods of price volatility—before the market rebounds.
Why Share Price Movement Creates Opportunity
When shares vest at a high price, any gain in value when those shares are sold is subject to capital gains tax. If you’re holding these shares in your own name, dividends and capital gains are taxed at rates as high as 47%.
Let’s say your shares vested when the price was $100 and they later rose to $120. Selling those shares would trigger a taxable capital gain. Yet, if the share price falls back to $100, that temporary drop creates a unique window: you may be able to restructure the ownership of your shares without incurring capital gains tax.
This isn’t just about reacting to market conditions—it’s about using them to your advantage.
1. Transfer Shares to a Lower-Income-Earning Spouse
If you have a spouse on a lower marginal tax rate, transferring shares to them can create significant tax savings in the future, particularly on dividends and future capital gains. This may also provide asset protection benefits if you’re in a role which carries legal liability.
Why this works:
- Income from dividends is taxed at your spouse’s lower marginal rate.
- Any future capital gains on sale are also taxed at their lower rate.
- You retain wealth within the family unit while improving tax efficiency.
Learn more in our related article: Unlocking Financial Opportunities for Executives with Lower-Earning Spouses
2. Transfer Shares to a Family Trust for Flexibility
For executives looking to build wealth outside of superannuation, transferring ESS shares to a family trust can offer flexibility and control. Trust structures allow you to distribute income and capital gains each year based on who in the family is most tax-efficient to receive them.
Advantages of a family trust:
- Distribute income across family members to lower the household tax burden.
- Maintain control of assets while adapting distribution each year.
- Protect assets from personal liability associated with your role.
This strategy can be particularly helpful when planning on building assets outside of superannuation, or if you’re moving toward a consulting role where your income may fluctuate year to year.
3. Contribute Shares to Superannuation
Superannuation remains one of the most tax-effective structures available in Australia. If your ESS shares have temporarily dropped in value, it may be an ideal time to contribute them to your super fund as an in-specie contribution.
Tax advantages include:
- Tax on income and capital gains within super ranges from 0% to 15%.
- Concessional and catch-up concessional contributions can reduce your taxable income.
- Long-term compounding within a low-tax environment boosts retirement outcomes.
See our full guide: Time to Catch Up? Why You Should Consider the NEW Concessional Contributions Catch-Up Provision.
4. Consider Complexities: ESS Plan Rules and Overseas Tax
Before making any changes, it’s essential to understand the rules of your specific ESS plan. Each grant may have:
- Minimum shareholding requirements you must maintain
- Transfer restrictions or limitations on who within your family group may own shares
- Reporting and compliance obligations
If you’re currently on secondment or have recently worked overseas, be aware that transferring shares may have cross-border tax implications.
We recommend reading: Navigating the Complexities of Living and Working Overseas for Executives.
Your Next Steps: From Volatility to Opportunity
Share price volatility doesn’t need to be a source of stress. With the right legal, tax and financial guidance, you can turn this moment into a strategic advantage—rather than letting it slip by unnoticed.
Start by taking stock of your current shareholdings and understanding when your shares vest and under what conditions. From there, review the rules of your Executive Share Scheme to identify any transfer restrictions or minimum holding requirements that might apply. Then, consider which ownership structure—whether it be your spouse, a family trust, or your super fund—offers the greatest tax efficiency and asset protection for your situation.
This process doesn’t have to be overwhelming. In fact, with the right support, it can be one of the most valuable decisions you make this financial year.
To explore your ESS strategy in light of recent share price movements, you can call James at +61 (0) 7 3007 2000 or email contact@resourcesunearthed.com.au.
To learn more about James, visit this link.
Resources Unearthed is a solutions hub that connects senior executives, established professionals and business owners in mining and resources with proven specialist advisers.
Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth ABN 54 139 889 535 AFSL 357306. This advice is general and does not take into account your objectives, financial situation or needs. You should not act on it without first obtaining professional financial advice specific to your circumstances.
*Please note: For advice and services relating to this matter that are not offered under the Fortnum Private Wealth AFSL, in accordance with our collaborative advice model, when required, such matters are referred to appropriately qualified professionals.
