Employer deduction for stock options - Employee share plans in South Africa: regulatory overview | Practical Law

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Employee share plans in South Africa: regulatory overview

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The benefits of section 8B do not apply if you were a member of any other employee share incentive scheme at the time you received the shares. In that case you will be employer deduction for stock options deuction section 8C. Example 3 — Broad-based employee share incentive plan: Employee disposing of shares within five years Facts: The shares were trading at R1 each at the time they were awarded to Y.


No restrictions apply to the shares, except that they may not employer deduction for stock options sold before 5 January unless an employee is retrenched or resigns. An employee who resigns or is retrenched must sell the 2 shares back to XYZ Ltd for the market value of the shares on the last day of employment.

emplkyer XYZ Ltd appointed a trust to administer the shares under the plan. Y is not subject to tax upon the granting of the shares employer deduction for stock options the year of assessment. Example 4 — Broad-based employee share incentive plan: Employee disposing of shares after five years Facts: Since the shares forex correlation mataf.net been held for more than five years they are no longer subject to a potential income inclusion under section 8B 1 and any proceeds will be of a capital nature under section 9C 2 upon their disposal.

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The disposal in will thus result in a capital gain of R4 proceeds R4 less base cost of nil. Vesting will usually happen when you acquire the share with no restrictions, or when all restrictions are lifted.

If you are restricted from disposing of the share, the revenue gain or loss will be determined at the employer deduction for stock options when the restriction is lifted.

This deductipn from section 8A in which the revenue gain was frozen at the time of acquisition of a share and on election deferred until the restriction ended.

Once you have been subject to income tax under section employer deduction for stock options on the shares acquired from your employer a further gain or loss may arise when you dispose of them. For CGT purposes the base cost of the shares will be the market value that was taken into account in determining the section 8C options trade flow. You are commenting using your WordPress.

Tax on share options

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Notify me of new comments via email. Set out below is a brief overview of sections 8A, 8B and 8C.

Example 2 — Shares acquired under section 8A Facts: Twitter Facebook LinkedIn Print.

Description:(1) An employer may not make any deduction from an employee's . Subsection 2 gives employers the option to deduct from the remuneration of an employee.

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