From 1 April 2026, if you are an unlisted company, you can elect to defer the tax liability for employees who receive shares or share options under an employee share scheme (ESS) if you designate them to be ‘employee deferred shares’.
When employee deferred shares become taxable
The tax for an employee receiving ESS shares or options which are designated by the employer as employee deferred shares is deferred until 20 days after the ‘liquidity event date.’
A liquidity event date is the earlier of either:
- The company is listed on the stock exchange
- The employee deferred shares are sold, transferred or cancelled.
If there is a restriction that prevents disposal of the employee deferred shares, the liquidity event date will be the date the restriction ends.
The employee is taxed on the market value of the shares minus the consideration paid for the shares by them (if any).
Issuing employee deferred shares
Only an employer can elect to designate shares to be employee deferred shares. The employer needs to clearly inform affected employees that their ESS shares are employee deferred shares.
Within 20 days of issuing the employee deferred shares, the employer must send us a web message, including the following:
- deferred employee share scheme’ in the subject line
- the IRD number and name of the employee(s)
- the date the shares were issued
- the number of employee deferred shares issued.
An employer can elect to treat only some of their employees and not others as having received employee deferred shares in the same issuance
Tax Technical advice
Find out more about employee shares schemes (ESS) and how they are taxed.
Employee share schemes (tax.technical.govt.nz)
You may want to speak with your tax professional.