Q:
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What is the basis of assessability of share awards and share options?
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A:
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If you are granted a share option, you will be assessed when you exercise, assign or release that option. If you are granted a share award, you will be assessed in the year you are fully entitled to the benefits of the shares.
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Q:
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How are the benefits from share awards and share options are taxed?
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A:
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For share awards, the value of the benefit received will be taxed. If the shares are awarded to you free of charge, the market price of those shares must be included in your assessable income. If you are allowed to buy shares at a price lower than the market price, you will pay tax on the difference. Meanwhile, the tax benefit of the share option is the difference between the price paid and the market price at the time of exercise, assign or release.
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Q:
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As an employee, how do I report share awards and share option gains?
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A:
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Report benefits derived from share awards or options in your Tax Return for the relevant year of assessment. You should report all taxable gains, including the gains connected with former employment as well.
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Q:
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As an employer, how do I report share awards that granted to my employee?
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A:
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Benefits from share awards must be reported as the employees’ income in correct form.
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Q:
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What if a new employee was conditionally granted a share option prior to commencement of his employment in Hong Kong and that option could only be exercised after rendering services in Hong Kong, is it necessary to report this information to the IRD?
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A:
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Yes, you are required to file the information to the IRD through the correct form within 3 months after employing him. And you should confirm in the form that this new employee has been conditionally granted a share option that can be exercised after rendering services in Hong Kong. Further, a list should be prepared as an attachment to the form, showing details of:
1.
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Number and type of shares covered by the option;
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2.
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Consideration paid to grant the option (if any);
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3.
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Consideration required to exercise the option; and
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4.
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Period within which the option must be exercised.
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FAQ
