On 1 March 2011 MaxBuild Ltd granted me an option to purchase 10 000 equity shares in the company for R75 each. The conditions attaching to the grant of the option were that I would not be entitled to dispose of the shares for five years or until I resign, whichever occurred first. At 29 February 2016 the shares had a market value of R123 each. This offer was not extended to any other employees at the time it was made and I'm still in the employment of MaxBuild Ltd. How will this transaction be taxed in the 2016 year of assessment?
The tax will only be triggered when the shares vest in your hands, that is when they are entitled to be yours and therefore sold. So after 5 years this will only be taxed as the difference between the price at that stage and the cost being R75.
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