Foreign Employee Share Schemes

A person entering New Zealand may have been granted shares or share options by their overseas company employer for nil or below market consideration as part of their remuneration package.

Generally, benefits received by a tax resident under an employee share scheme are taxable as employment income, including share options acquired by an individual in connection with employment at a discounted (or nil) price.

Such benefit may also be subject to the foreign investment fund regime if the shares were granted by a foreign company.

Shares Subject To Foreign Investment Fund Regime?

Shares owned in a foreign company may be subject to the foreign investment fund regime unless an exemption applies. Therefore, when an individual acquires shares in their foreign employer’s company, the potential application of the foreign investment fund regime must be considered.

Where the individual is a transitional resident, issues of cross border share or share option remuneration shall be considered. Complexities may arise where the individual has been granted employee share options or has received unvested shares while as a non-New Zealand tax resident and then exercises them after they have become a transitional resident.

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