I’m a Multi-Millionaire!

Hi Barefoot,

I have a question about how to deal with an upcoming bit of luck. I am the CTO (Chief Technology Officer) of a startup, and when I started I was allocated 5 per cent of the company’s shares. It now looks like we are about to be bought, and valuations suggest my share could be worth up to $4 million! I have been with the company for over 12 months, and I paid a notional $1 for my entire share. I have an outstanding mortgage of about $800,000. Mate, what do I do to maximise this opportunity?

Chris

Hi Chris,

Well played! The first thing you need to do is talk to an accountant who specialises in employee share schemes about your potential capital gains tax (CGT) bill. Given you’ve held the shares for over 12 months, you’ll get a 50 per cent discount on your CGT bill.

However, I’d definitely want a second opinion on what the value of the shares was when they were allocated to you.Once you have that sorted, I’d pay off your mortgage, put three months of Mojo in an online saver account, max out your aged-based super contribution allowances, and then invest the rest in blue chip shares (to balance out your riskier startup employment) via a family trust.

Good luck.

Scott