RSU Tax in Australia: When You Actually Pay, and How Much

📆 What an RSU is, and why vesting matters🔗

A restricted stock unit is a promise. Your employer commits to giving you shares once conditions are met, usually time served. Until that happens you own nothing. No shares, no dividends, no vote, just an entitlement on paper.

Vesting is the moment the promise becomes shares, and it is also the moment the ATO starts paying attention. Everything about RSU tax in Australia turns on that date. This article is the detail behind our guide to employee share schemes generally.

⏱️ When the tax hits, and what is taxed🔗

Almost every RSU plan is a tax-deferred scheme, so tax is not due at grant. It is due at the deferred taxing point. For a share, the ATO defines that as the earliest of two things: when there is no real risk of forfeiture and the scheme no longer genuinely restricts disposal, or 15 years after acquisition. For a normal vesting schedule, that first condition is met on the vest date.

The amount assessed is the market value at that point, less your cost base. Since RSUs normally cost you nothing, the cost base is zero and the whole market value at vest is assessable income. It is taxed at your marginal rate alongside your salary, not at some separate share rate. Our guide to the tax brackets sets out what that rate is.

🎯 The essential: One rule changed and a lot of older writing has not caught up. Since 1 July 2022, ceasing employment is no longer a deferred taxing point. Leaving your job does not by itself trigger tax on interests you keep.

🧮 A worked example, grant to vest to sale🔗

Say you work for the Australian arm of a US-listed company. You were granted 100 RSUs at no cost, vesting in one tranche. To keep it readable this example uses an illustrative rate of AUD 1.00 to USD 0.65, so USD 1.00 is about AUD 1.5385. Use the actual rate for your own vest date.

Look at the sold row. It is 37 in every column, and that is not a coincidence of the numbers chosen. The shares sold equal the tax divided by the price, and the tax is the rate times the price times the shares. The price cancels out. You always surrender your marginal rate as a proportion of the grant.

The 37% rate here is illustrative. For 2025-26 the ATO applies 37c in the dollar on income between $135,001 and $190,000, and 45c above $190,000, before the 2% Medicare levy. A large vest can push you into a higher bracket than your salary alone would.

⚠️ Sell to cover, and the withholding trap🔗

Sell to cover is when the plan administrator, often Computershare, Fidelity or Morgan Stanley, sells part of your vested shares to raise cash for tax. You keep the rest. It feels like PAYG on your payslip. In Australia it usually is not.

Here is what the ATO actually says. Where you have given your employer your tax file number, tax is withheld from an ESS discount only at your request, and the amount cannot exceed 50% of the discount. Withholding is compulsory only where no TFN has been provided, in which case the employer must withhold at the highest marginal rate.

Two consequences. If the plan sells at a flat rate above your actual marginal rate, you have permanently given up shares to fund a refund you will wait months for. If it sells too little, or nothing, the shortfall is a real tax debt you need to have money for. Either way, work out the likely liability before the vest date rather than after, and use the income tax calculator with the vest amount added to your salary.

One more thing people miss: the shares sold to cover are themselves a disposal for capital gains purposes. Sold at or near the vest price, the gain is usually close to nothing, but it is still an event to record.

🌏 RSUs in a foreign parent company🔗

If you work for the Australian subsidiary of a US company, your RSUs are almost certainly shares in the US parent, listed on the NYSE or Nasdaq. Everything above still applies, with one extra step: converting to Australian dollars.

The rule is to use the rate that applied when the income was made available to you, which for RSUs means the vest date. Not the grant date, not an annual average, not whatever your bank shows today. The ATO publishes exchange rate tables sourced from the Reserve Bank and provides a foreign income conversion calculator.

• Note the exact vest date and the number of shares that vested
• Find the published rate for that date
• Convert the share price to AUD, then multiply by the shares vested
• Keep the rate, the source and the date with your records

If US tax is withheld at source under your employer's payroll structure, you may be entitled to a foreign income tax offset here. That is genuinely complicated territory and worth a registered tax agent who handles cross-border employment income rather than a general practitioner.

📈 After vesting, and the CGT clock🔗

Once the taxing point passes, Division 83A treats the shares as re-acquired immediately afterwards. That does two things: it resets your cost base to the market value at vest, and it resets your acquisition date to the vest date.

🎯 The essential: Granted three years ago, vested today? Your 12 month clock starts today. Sell inside a year of vesting and the whole gain is assessable. Hold past it and the 50% discount applies to the gain above the vest price.

If the price falls after vesting, the income tax already assessed does not move. Sell below the vest price and you have a capital loss, which offsets capital gains now or later but never your salary. Our guide to capital gains tax on shares covers how that works in practice.

🧾 What to check on your ESS statement🔗

Your employer must give you an ESS statement by 14 July after the end of the financial year in which the taxing point fell. It is a separate document from your income statement, and it is easy to confuse the two.

• The discount amount. Should equal the market value at the taxing point less your cost base, which is zero for most RSUs.
• The financial year and the taxing point date. Cross-check against your brokerage records.
• The scheme type. For a standard RSU plan it should say tax-deferred.
• The AUD figure and the rate used. If the shares are foreign, check which rate and which date the employer applied.

The ATO pre-fills some of this into myTax, but pre-fill is not always complete on deferred schemes. Verify it against the statement before lodging, using our lodgement guide if you need the steps. If the statement has not arrived by mid-July, chase your share plan team rather than waiting until October to discover the gap.

❓ Frequently asked questions🔗