Employee share scheme

haoba

In year 2015, company grant me 100 share with market value $10 each at the time of the grant. Since I don't need to pay for that, therefore, the $10X100=$1000 was treated as income on 2015 tax return and I paid tax on the amount of $1000.

Now in year 2018, the market value of the share is $16 each and if I sell this, do I need to pay tax again? If so, how much.

Since I hold the share for more than 12 months and eligible for 50% CGT discount, I would think the Capital Gain on year 2018 is $16*100*50%=$800. Since I already pre-paid the tax $1000 on year 2015. Does it mean the actual Capital Gain/Lost on year 2018 is $800-$1000=-$200. So it's $200 loss?

glk47

Your cg is (16-10)*100=600. cgt = 600*marginal_tax_rate/2

When you pay tax in 2015, you are not paying 1000, mate, you are paying tax ***based on*** 1000 income. The tax you paid is 1000*marginal_tax_rate. Assuming your tax rate is 32%, then you have paid 320 tax in 2015.

The 50% discount is for gains, i.e., 6 dollars in your case, not the proceed (i.e., not 16 dollars).

haoba

thanks, that is great, what about the following scenario?

In year 2015, I bought 100 share with the market value $10 each, but since the company gave me 20% discount, I paid $8 per share and because of that, I need to pay the tax for the amount 100x10x20%=$200, let's say tax rate is 30%. I paid 200x30%=60 dollar on 2015 tax return.

In year 2018. I sell the share for $10 dollar each. So the capital gain is 10-8=2 dollar each. so the capital gain tax is 100x2x50%x30%=30 dollar.

Since I paid 60 dollar tax on 2015 assuming I already made the gain of 20% (even though I haven't sold any share). Now in 2018, the actual tax I need to pay is 30 dollar, so is it correct that in 2018. I have capital lost of 60-30=30 dollar?