RSU Tax in Australia: How Your US Stock Grants Are Taxed

If you work for a US tech company from Australia, RSUs are probably a significant chunk of your total compensation. But the tax treatment in Australia catches many people off guard. There are two separate tax events, mandatory currency conversions, and a foreign tax offset most people forget to claim.

Key takeaways

• RSUs trigger two separate tax events: income tax at vesting, and CGT at sale.
• At vesting, the fair market value of your shares is added to your assessable income and taxed at your marginal rate.
• At sale, the difference between the sale price and the FMV at vesting is a capital gain (or loss).
• You must convert USD to AUD at the exchange rate on the date of each event -- not one rate for both.
• US tax withheld on your RSUs can be claimed as a Foreign Income Tax Offset (FITO) on your Australian return.
• RSU income stacks on top of your salary, which often pushes you into a higher tax bracket.

What are RSUs?

Restricted Stock Units are a form of equity compensation. Your employer grants you a number of units. Those units vest over time -- typically over four years with a one-year cliff, though schedules vary.

When units vest, they convert into actual shares of company stock. At that point, you own the shares. You can hold them or sell them.

RSUs are not options. There is no exercise price. The full value of the shares at vesting is your compensation. This matters because the entire fair market value at vesting is taxable income in Australia, not just the gain above some strike price.

The two tax events

This is the part most people get wrong. RSUs are not taxed once. They are taxed twice, at two different points, under two different parts of the tax system.

Event 1: Income tax at vesting

When your RSUs vest, the ATO treats the fair market value (FMV) of the shares as ordinary income. It is assessed under Division 83A of the Income Tax Assessment Act (the Employee Share Scheme rules).

This income is added to your other assessable income for the financial year -- your salary, interest, dividends, everything. You pay tax on it at your marginal rate.

Event 2: Capital gains tax at sale

When you eventually sell the shares, the difference between the sale price and the FMV at vesting is a capital gain or capital loss. The FMV at vesting becomes your cost base for CGT purposes.

If you hold the shares for more than 12 months after vesting before selling, you qualify for the 50% CGT discount. If you sell within 12 months of vesting, you pay CGT on the full gain at your marginal rate.

Worked example

At vesting

You have 100 RSUs that vest on 15 August 2025. On that date:

• Stock price: US$150 per share
• AUD/USD exchange rate: 0.65

Total value in USD: 100 x US$150 = US$15,000

Converted to AUD: US$15,000 / 0.65 = A$23,077

This A$23,077 is added to your assessable income for FY2025-26. It is ordinary income, taxed at your marginal rate.

At sale

You hold the shares for 14 months, then sell all 100 on 15 October 2026. On that date:

• Stock price: US$180 per share
• AUD/USD exchange rate: 0.64

Sale proceeds in USD: 100 x US$180 = US$18,000

Converted to AUD: US$18,000 / 0.64 = A$28,125

Capital gain: A$28,125 - A$23,077 = A$5,048

Because you held the shares for more than 12 months after vesting, the 50% CGT discount applies:

Discounted capital gain: A$5,048 x 50% = A$2,524

This A$2,524 is added to your assessable income for FY2026-27 and taxed at your marginal rate.

Currency conversion matters

Notice in the worked example above that the AUD/USD rate changed between vesting (0.65) and sale (0.64). This is not a minor detail. You must convert each event to AUD using the exchange rate on the date of that event.

The ATO expects you to use the actual rate on the day -- not an average rate, not the rate when you file your return, and not the same rate for both events. The Reserve Bank of Australia publishes daily exchange rates you can reference.

Currency movements can significantly increase or decrease your tax liability. In the example, the weaker AUD at sale (0.64 vs 0.65) made the AUD sale proceeds higher, increasing the capital gain.

How RSU income pushes you into higher brackets

RSU income stacks on top of your salary. For tech workers earning solid base salaries, this frequently pushes total income into a higher marginal bracket.

Example: Bracket impact

Suppose your base salary is $120,000 and your RSUs vest with an AUD value of $23,077 in the same financial year.

Without the RSU income, your top marginal rate is 30%. With the RSU income, $8,077 of your total is now taxed at 37%. That is an extra $565 in tax just from crossing the bracket threshold -- on top of the tax on the RSU income itself.

At higher income levels, the impact is even more pronounced. If your salary is $180,000 and RSUs push you over $190,000, the top slice hits the 45% bracket.

Double taxation and foreign income tax offsets

If you work for a US company, the US will typically withhold tax on your RSU income. The standard withholding rate for supplemental income is 22% in the US (reduced to 15% if you have a valid W-8BEN claiming treaty benefits).

Australia also taxes this income in full. So the same income gets taxed in both countries.

The fix is the Foreign Income Tax Offset (FITO). Australia's tax treaty with the US allows you to claim a credit for the US tax paid against your Australian tax liability on the same income. You claim this in your Australian tax return.

The offset is limited to the lesser of:

• The US tax actually paid on the RSU income
• The Australian tax payable on that same income

In most cases, Australian marginal rates are higher than the US withholding rate, so you will get the full FITO for the US tax withheld. But you will still owe the difference to the ATO.

W-8BEN

Make sure you have a valid W-8BEN form on file with your employer's stock plan administrator (typically E*Trade, Schwab, or Morgan Stanley). This claims treaty benefits and reduces US withholding from 22% to 15%. Without it, you are giving the US government 7% more than necessary -- and while you can claim it back as a FITO, it ties up your cash until you lodge your Australian return.

ESS reporting

Your employer is required to report RSU vesting events to the ATO under the Employee Share Scheme (ESS) reporting rules. This data is pre-filled in your myTax return.

The ESS statement should show:

• The number of shares that vested
• The date of vesting
• The market value per share at vesting (in AUD)
• Any discount received (for RSUs, this is typically the full FMV since there is no exercise price)

Check this statement carefully against your own records. Employers sometimes get the AUD conversion wrong or use a different exchange rate source. If the pre-filled amount does not match your calculations, use your own figures and keep documentation of the exchange rate you used.

Common mistakes

Forgetting to convert USD to AUD at each event's exchange rate. You cannot use one rate for both vesting and sale. You cannot use an annual average. Each event uses the rate on that specific date.

Not realising that vesting is a taxable event. Many people think tax only applies when they sell. Wrong. The full FMV at vesting is ordinary income.

Missing the FITO claim for US tax withheld. If the US withheld tax on your RSU income and you do not claim the foreign income tax offset, you are paying tax on the same income in two countries with no credit. This can be thousands of dollars left on the table.

Not tracking the AUD cost base for later CGT calculation. Your cost base for CGT is the AUD value of the shares at vesting -- not the USD price, and not what you originally "paid" (which was nothing for RSUs).

Selling shares across multiple vesting tranches without FIFO tracking. If you have RSUs vesting quarterly and you sell a portion of your holdings, you need to match the sale against specific parcels. The ATO expects you to identify which shares you sold and their respective cost bases.

This guide is for general information only and does not constitute financial or tax advice. Consult a qualified tax professional for advice specific to your situation. Tax brackets shown are FY2024-25 rates for Australian tax residents.