16 February 2019 at 20:41
I previously received an opportunity to invest in shares through my company. I invested a portion of my income every month and every six months shares were purchased on my behalf at a 14% discount. The shares are US based and tax was deducted locally off my payslip. I would now like to sell off my shares, but I don't fully understand how I'd be liable for tax. We were able to sell them as soon as we had them. They were part of an ESPP (Employee Stock Purchase Plan) and were purchased by deduction from salary and taxed (nothing given out-right). On the platform, they do seem to be classified as short/long term but I think this is geared up for US rules of capital gains.
1) Would I be liable for the difference between the 14% and their growth over time (Capital Gains Tax)?
2) The shares were purchased every six months so some are 6, 12, 18, 24, 30 and 36 months old. Would these be treated differently based on purchase date?
3) Because the shares are US Dollars based, does this make it more complex? (e.g. I may have made some profit simply on the rand dollar exchange too)?
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17 February 2019 at 13:54
Essentially the amount deducted as PAYE each month would be the discount 14% that you received because you purchased shares at lower than their value.
When it comes time to sell the shares now you would be liable for the Capital Gains Tax on the difference in the value of the shares when you bought them and when you sold them. You would need to get the company to work this out for you as they would have the value at these stages.
If you were allowed to sell the shares immediately when you purchased them then the value for CGT (Capital Gains Tax) purposes for yourself would be the selling price less the amount you paid for them at each point.