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Roscoe says: 4 March 2022 at 13:29 I've received 1000 share options that vest over 4 years at 25% per year. After the initial vesting on 1 Jan 2022 I have the right to exercise the options, it's likely I will only exercise the options at company exit a few years later. When will I be liable for CGT? |
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TaxTim says: 4 March 2022 at 16:56 Did you receive the share options due to being employed at the company? Are they related to a BEE scheme by any chance? |
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Roscoe says: 4 March 2022 at 16:58 Yes, I received the share options due to being employed at the company. They are not related to a BEE scheme. |
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TaxTim says: 4 March 2022 at 17:21 Share options granted due to employment fall into s8C of the Income Tax Act, which taxes the gains or losses on the options when they vest. The gain or loss is calculated by subtracting the market value of the share options at vest date from the cost of the share options on grant date. This gain is added to your other income and taxed as normal income, just like your salary (i.e not as a capital gain). If there is a loss on vesting date, this loss can be deducted from your taxable income. When you exercise and sell your shares at a later date, the gain is taxed as a capital gain and CGT rates apply. At this point, the gain is calculated by subtracting the market value at vest date from the market value at the date of the disposal. The annual exclusion of R40 000 is applied to the gain and then only 40% of the remaining amount is included in your taxable income. |
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