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In today’s tech-driven job market, Restricted Stock Units (RSUs) are marketed like pots of gold that companies are willing to hand over to the right candidates. Companies love offering them because they can feel generous without requiring immediate cash outlay and it entices employees to have longer tenures and get their cut. Employees often accept them because there is the potential for a big payday if the company does well.

But here’s a hidden truth: RSUs only work in your favour if you treat them like a deliberate investment strategy — not a bonus. My accountant put it best: “If the company gave you an extra 10k in cash, unless your immediate plan was to buy company stock, you want to take the cash. Every time.”

If you don’t understand how they’re taxed, when they vest, how volatility affects you, or how they inflate your taxable income, RSUs can quietly cost you more than they help.

A higher base salary often works out better (especially after taxes)

Many people assume that “$X in RSUs + lower salary” is equal to “higher salary + no RSUs.” It’s almost never that simple.

Why a higher base salary can be better

• Salary is predictable. You know what you’re getting and when.
• Superannuation contributions (in Australia) are based on salary, not RSU value — so higher salary boosts your retirement savings.
• You pay tax as you go, rather than being hit with a lump-sum taxable event on vesting day.
• Cash flow is immediate, not tied to a volatile stock.

RSUs, on the other hand, introduce risks:

• You’re taxed on the market value at vest whether you sell or not.
• If the company stock drops after vesting, you’ve already paid tax on a higher amount than you actually get when you sell¹.
• RSUs don’t help with borrowing capacity like salary does (banks discount them heavily or ignore them outright).
• When you model the scenarios, a surprising number of people discover that a higher base salary creates more net income, more super, and less uncertainty, especially once taxes are factored in.

Tax hits at vest time (not when you sell) and capital gains apply later

This is the part that blindsides most people.

When your RSUs vest you’re taxed as if you received a cash bonus equal to the value of the shares on vesting day.

Example:

• 200 RSUs vest
• Share price at vest = $50
• You’re taxed on $10,000 of income, immediately.

It doesn’t matter whether you keep the shares, the price drops tomorrow or you actually wanted the stock. You owe the tax man now².

Then capital gains tax applies when you sell. After vesting, your cost base is the market value at vest.

• If the stock goes up, you pay CGT on the gain.
• If the stock goes down, you’ve paid income tax on “phantom value” you never really benefited from.

This double-tax structure (income tax now, capital gains tax later) means you need to manage RSUs proactively, not passively.

RSUs can cause hidden headaches with Centrelink and other income based benefits

Because RSUs are taxed as income at the moment they vest, they can unexpectedly inflate your taxable income for the year. This has real consequences beyond your immediate financial picture.

Services such as:

• Family Tax Benefit
• Child Care Subsidy
• Parenting Payment

…all rely on your adjusted taxable income (ATI).

A large RSU vest can push you into repayment territory or out of eligibility altogether potentially causing an unexpected reconciliation debts months later.

And the worst part? Centrelink doesn’t care that you didn’t receive cash — you’re assessed on the taxable income, not liquidity. RSUs are counted for all these calculations, even if you never sold a single share.

So When Do RSUs Make Sense?

Now, it’s not all doom and gloom. RSUs can be a valuable part of your compensation but you need to be intentional about how you handle them.

They make sense when

• You have the cash flow to cover the tax at vest.
• You plan your sales to manage CGT efficiently.
• You treat RSUs as part of your investment strategy — not a surprise bonus.
• Your employer’s stock is stable, or you diversify immediately.
• You understand and model how RSUs affect subsidies, benefits, HECS, and overall tax position.

They don’t make sense when

• You assume “free money” without planning for tax.
• You’re depending on steady income and low volatility.
• You’re eligible for income-tested benefits and want to avoid large Centrelink debts.
• You treat RSUs as part of your salary rather than as a risky investment.

RSUs are powerful wealth-building tools only if you understand how they work. For many people, especially those who prefer predictable earnings, a higher base salary is far safer, easier to manage, and often more profitable.

RSUs aren’t inherently bad they’re just over hyped with plenty of nuance. Not seeing the full picture is what makes them dangerous.

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