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Equity granted to Gold Coast employees needs one value for their tax and a different one for the company's accounts, and a priced round leaves ordinary shares worth less than the investors paid for theirs. We work out each figure, and explain the difference, while the terms can still be changed.
Indicative valuations from A$799. Certified Summary and Detailed reports from seven business days.
A Gold Coast company that gives equity to staff needs two figures: a Division 83A market value for the employee's tax and an AASB 2 grant-date fair value for its own accounts. When capital is raised, the same analysis splits the round price across share classes, fixes the ordinary share value and records the ESIC evidence.
Staff equity on the Gold Coast is not confined to start-ups. A software business in Varsity Lakes or Robina offers options so its developers do not take remote roles with interstate employers. A health technology company working alongside the Gold Coast University Hospital and Griffith University in the Parklands precinct issues shares to the clinicians and researchers behind its product. A surf and lifestyle brand selling online from Burleigh Heads brings its operations manager onto the register, and a family-owned marine manufacturer at Coomera uses a loan-funded plan to hold on to senior staff through a succession. Each grant starts two tests on the same day: Division 83A of the Income Tax Assessment Act 1997 taxes the employee's discount against market value, and AASB 2 requires the company to expense the award's fair value at grant date. The questions differ, the bases differ, and the answers rarely match.
Using a single figure for both causes two problems. A market value set too low lets the ATO amend the employee's assessment and look harder at the company's ESS reporting. A fair value set wrongly misstates every profit and loss statement across the vesting period, and the error tends to come out at the first audit or in the due diligence a new investor commissions.
A priced round forces the issue. Once a Gold Coast scale-up closes its first institutional round, every later grant is judged against the round price, yet the investors hold preference shares with rights the staff's ordinary shares do not carry. Setting the option exercise price at the preference price either overcharges employees or puts at risk the start-up concession the plan depends on, and nobody notices until an auditor or the ATO asks for the working.
We prepare the two values as separate conclusions with the reasoning set out, for founders and boards from Southport and Bundall to Robina, Burleigh Heads and the northern growth corridor around Coomera and Helensvale. If the figures will not support the position the company wants to take, we say so before any grant letter goes out.
A certified valuer will listen to your situation and answer any questions you may have, at no cost.
Division 83A settles when an employee is taxed on equity and on what amount. AASB 2 settles what the company expenses and in which periods. One calculation cannot answer both questions, and trying to make it do so usually gets at least one of them wrong.
The taxable amount is the market value of the share or right less whatever the employee paid for it. Tax arises in the year the interest is acquired unless the scheme qualifies for deferral, which moves the taxing point to when any real risk of forfeiture and any genuine restriction on disposal have ended, and in any case no later than fifteen years after grant. Whichever date applies, the company needs a market value it can defend for that day.
An equity-settled award is valued once, at grant, and that figure is spread over the vesting period regardless of later share price movements. A cash-settled award such as a phantom share plan is remeasured at each reporting date until it is paid out. Service conditions and non-market performance conditions act through the number of awards expected to vest, and the expense is reversed if they fail. A market condition, such as a total shareholder return hurdle, is priced into the grant-date value, so the expense stays even if the hurdle is never met.
Subdivision 83A-33 allows an unlisted Australian resident company that has been incorporated for under ten years, with aggregated turnover of no more than $50 million, to give staff equity without an upfront tax liability. It works only if two limits are met on the grant date: any discount on a share is no more than 15 per cent of market value, and an option's exercise price is at least the market value of the underlying share. Both depend on a value that existed at grant, not one pieced together later.
Employee ESS statements are due by 14 July and the ESS annual report must reach the ATO by 14 August, and both draw on market values. Queensland payroll tax is a separate question: under the Payroll Tax Act 1971 (Qld), administered by the Queensland Revenue Office, shares and options granted to employees are generally wages, valued on the grant date or the vesting date as the employer elects. One award that vests in stages can therefore call for a value at a third date.
An eligible start-up can use the ATO's safe harbour methods: net tangible assets for shares and, for options, a published table driven by share value, exercise price and time to expiry. That certainty is worth having. The number it produces, though, can sit well away from what the equity would actually sell for, and where the safe harbour is not available or gives a plainly unrealistic answer, market value reverts to general principles: the price a willing and informed buyer and seller would agree at arm's length, with neither forced to deal.
The starting point is a value for the whole unlisted company, using the income and market approaches, or the latest arm's length round where it is recent and nothing material has changed. The whole-of-company figure is then shared out across each class of security on the register. A liquidation waterfall pays each preference in order and suits a company nearing an exit. The option pricing method treats each class as a call option over the company, with the preference amounts as strike prices, and a backsolve adjusts that model until it returns the price the latest investors paid. For a Gold Coast software or health technology company a few months past a priced round, the backsolve is usually the most defensible route to an ordinary share value.
Options and performance rights are then priced with a model matched to their terms. Black-Scholes handles a plain option with a fixed exercise price; a binomial lattice deals with early exercise and vesting in tranches; Monte Carlo simulation is needed once a market hurdle or another path-dependent feature is involved. With no trading history, volatility is the input an auditor looks at first, so we derive it from a documented group of listed peers matched on industry, size and gearing, over a period consistent with the award's expected life. A loan-funded share plan, used by some established Gold Coast manufacturers and construction groups for senior staff, is in substance an option because the loan is limited in recourse, and we value it that way whatever the plan document calls it.
When a company is raising capital, this analysis also answers the practical questions founders bring to us. What is the headline pre-money figure worth once the option pool is created ahead of the new money, convertible notes and SAFEs convert at their cap or discount, and the preference stack ranks ahead of the ordinary shares? On the day of the next grant, what is a single ordinary share worth? For the early stage innovation company offset, the company has to meet the early stage test and either the 100-point innovation test or the principles-based test at the time the shares are issued. Your tax adviser decides eligibility; we prepare the dated market sizing, scalability and competitive advantage evidence the principles-based test relies on. Where a bank is part of the funding, a lender-facing valuation covers enterprise value for sizing the facility, the assets offered as security and the headroom against the proposed covenants.
None of these is visible on the day of the grant. They come to light when an auditor, the next investor's advisers or the ATO asks to see the working, and by then the terms are fixed.
Nearly every share scheme or raise valuation ends up with someone outside the company: the auditor checking the AASB 2 expense, the ATO reviewing the ESS annual report or a start-up concession claim, or the advisers to the next round's investors. For that reason most clients choose a certified report. The Indicative valuation is most useful at an earlier point, when the plan is still in draft and its terms can change.
Every conclusion in the report is tied to its framework, the valuation date that framework requires, the standard of value and the information relied on. It sets out the whole-of-company value, how that value is divided across the classes, the model chosen for each award and the reason for it, each input and its source, and how far the answer moves when the main inputs change, usually volatility and expected term. If the Division 83A value and the AASB 2 value are not the same, the report sets out the reasons, giving your tax adviser and your auditor one shared reference.
A certified valuer signs each report, deals with the auditor's questions directly, defends the peer group and the model choice, and stands behind the conclusion if the ATO or a later investor disputes it. If a disagreement about value ends up in the Supreme Court of Queensland, between founders, say, or between the company and a departing executive, the same valuer can give expert evidence under the Uniform Civil Procedure Rules 1999 (Qld). We work with your tax adviser, the lawyers drafting the plan rules and your auditor from the outset, because a valuation prepared without them usually has to be done again.
If the auditor questions the volatility input and the ATO questions the exercise price, will one set of working papers answer both? If not yet, wait before granting.
Talk your situation through with a certified valuer before you commit to anything, at no cost.