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Income shown on IRP5 for code 3718 vesting of share

Posted 13 July 2015 under Tax Questions



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Les says:
10 July 2015 at 9:23

I received some share options from my employer that have vested and have been sold. What amount should be shown on my IRP5 under code 3718? Should the amount be the value of the shares when the shares vested or the value of the share when the shares were sold? In my case the difference in the share price between the vesting date and sale date is over R20000.

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TaxTimTaxTim says:
10 July 2015 at 19:17

Please provide some dates for when the share options were obtained and vested and sold?


Les says:
11 July 2015 at 12:51

The Shares were issued at restricted shares approx 4 1/2 years ago. They vested 1 1/2 years ago and were sold within 7 days of them vesting


TaxTimTaxTim says:
12 July 2015 at 22:04

Were the shares issued as part of a BEE scheme?


Les says:
13 July 2015 at 5:35

No they were issued as part of long term incentives


TaxTimTaxTim says:
13 July 2015 at 8:17

So the Fringe Benefit to you would be the different between the Price they are quoted to you at - so what you paid for them when they were awarded and the market price on the day they vest.


Les says:
13 July 2015 at 8:26

I still need to know what value should be on my IRP5. Should the price on my IRP5 be the value of the shares on vesting date, or the value on the date they were sold. For example on the day the shares vested the share price was R200 per share, the day the shares were sold (14 days after vesting date) was R190 per share. If there were 1000 shares should my IRP5 under code 3718 be R200,000 or R190,000.


TaxTimTaxTim says:
13 July 2015 at 18:00

It should be the price on the vesting date less what you "paid" for them when they were granted. Effectively you now have a capital loss of R10 per share you can also use to reduce the tax on these options.


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