The New Zealand Government recently introduced a new Bill impacting plan schemes across New Zealand. With these recent changes affecting exempt employee share schemes in New Zealand comes an opportunity for both employers and employees to realize significant benefits.
But what’s changing? And how does this affect participating employees and companies offering share plan schemes in New Zealand?
Generally speaking, provided the eligibility requirements are met, exempt employee share schemes allows employers to provide benefits to their employees without causing their employees to incur a tax liability. This reduces compliance costs for schemes that are offered to most, if not all, employees.
The maximum value of shares provided to an employee and any discount provided by an employer on the market value of those shares have specific limits set by the Government. Recognizing inflation at record highs, effective 1 April 2025 the New Zealand Government has increased these limits as follows:
Maximum permissible value of shares provided to an employee per annum
Maximum permissible discount on share market value provided by an employer
Current thresholds
Proposed thresholds
What does this means for employers?
Taking advantage of these increased thresholds means companies can offer more discounted shares and greater employee tax benefits that appropriately align with both the company and employee’s interests. As an employer offering employee share schemes, it’s important to note that while these limits are being increased by parliament, companies still need to take action. Plan rules will need to be amended accordingly to realize the full benefits of these new proposed thresholds.
What does this means for employees?
Under the new Bill, the Government is proposing to increase the tax benefit of an exempt employee share plan (through applicable threshold increases) which may be an attractive financial benefit for both employers and employees.