Stocks

The benefits that you get from share awards or any exercise, release or acquisition of stock options are subject to income tax.

Share Awards

Exercising Employment in Singapore

If you are granted share awards during your employment in Singapore, the gains are taxable in the year the shares are granted to you .

The taxable value is the market price of the shares when the shares are awarded to you.

This means that if the share awards were granted prior to your posting to Singapore, the gains are not taxable.

Where the shares are subsequently sold, any gain/loss from the sale of shares are not taxable/deductible.

Grant date

1 Dec 2014

No. of shares

1,000

Market price per share at grant date

$10

Taxable gain in 2014

1,000 x $10 = $10,000

Grant date

1 Dec 2014

No. of shares

1,000

Market price per share at grant date

$10

Date of sale

1 Feb 2015

Market price at date of sale

$15

Taxable gain in 2014

1,000 x $10 = $10,000

If there is vesting imposed, i.e. the ownership will not pass to you until some time, the gains are taxable when the shares are vested to you.  The taxable value is the market price when the shares are vested.

Grant date

1 Nov 2014

No. of shares

1,000

Market price per share at grant date

$10

Vesting date

1 Feb 2015

Market price per share at date of vesting

$20

Taxable gain in 2015

1,000 x $20 = $20,000

If there is a selling restriction, the gains are taxable in the year when the selling restriction is lifted.  The taxable value is the market price when the selling restriction is lifted.

Grant date

1 Nov 2014

No. of shares

1,000

Market price per share at grant date

$10

Date selling restriction is lifted

1 Dec 2014

Market price per share at date selling restriction is lifted

$30

Taxable gain in 2014

1,000 x $30 = $30,000

Ceasing Employment and the Deemed Exercise Rule

You are deemed to have obtained taxable gains from share awards even if they have not vested or the selling restriction has not been lifted.

The taxable value is the market price of the shares one month before you cease employment or the date of grant, whichever is later. This is known as the deemed exercise rule.

Grant date

1 Jan 2014

No. of shares

1,000

Market price per share at grant date

$10

Date of vesting

1 Dec 2014

Date of cessation

1 Jul 2014

Market price per share on 1 Jun 2012 (1 month before cessation date)

$40

Deemed taxable gain in 2014

1,000 x $40 = $40,000

The gains are deemed final gains and if the actual gains are higher, the additional gains will not be assessed. 

If the actual gains are lower, you can apply for a re-assessment with supporting documents within four years from the Year of Assessment (YA) in which the deemed exercise rule is applied. 

For example, deemed gains for 2014 is taxable in the YA 2015. The application for reassessment must be made by 31 Dec 2019.

Stock Options

Exercising Employment in Singapore

If you are granted stock options while you are exercising employment in Singapore, the gains are taxable when you exercise the options.

The taxable value of stock options is the difference between the market price at the point of exercise and the price you paid for them.

This means that if the stock options were granted prior to your posting to Singapore, the gains are not taxable.

Where the shares are subsequently sold, any gain/loss from the sale of shares are not taxable/deductible.

Grant date

1 Dec 2014

No. of shares

1,000

Exercise price per share

$10

Date of exercise

1 Jan 2015

Market price per share at date of exercise

$15

Taxable gain in 2015

1,000 x ($15-$10) = $5,000

If there is a selling restriction, the gains are taxable in the year when the selling restriction is lifted.

The taxable value is the difference between the market price at the time the selling restriction is lifted and the price paid for the shares.

Grant date

1 Nov 2014

No. of shares

1,000

Exercise price per share

$10

Date of exercise

1 Jan 2015

Market price per share at date of exercise

$30

Date selling restriction is lifted

1 Feb 2015

Market price per share at date selling restriction is lifted

$25

Taxable gain in 2015

1,000 x ($25-$10) = $15,000

Ceasing Employment and the Deemed Exercise Rule

You are deemed to have obtained taxable gains from the stock options even if you have not exercised them or if the selling restriction is not lifted under the deemed exercise rule.

The taxable value is the difference between the market price of the shares one month before you cease employment or the date of grant, whichever is later, and the price you would pay for them.

Grant date

1 Jan 2014

No. of shares

1,000

Exercise price per share

$10

Date selling restriction is lifted

1 Dec 2014

Date of cessation

1 Jul 2014

Market price per share on 1 Jun 2014 (one month before cessation date)

$40

Deemed taxable gain in 2014

1,000 x ($40-$10) = $30,000

The gains are deemed final gains and if the actual gains are higher, the additional gains will not be assessed. 

If the actual gains are lower, you can apply for a re-assessment with supporting documents within four years from the Year of Assessment (YA) in which deemed exercise rule is applied. 

For example, deemed gains for 2014 is taxable in the YA 2015. The application for reassessment must be made by 31 Dec 2019.

Incentive Schemes

You may enjoy certain tax exemption on the gains arising from your Employee Share Options (ESOP) plans/Other Forms of Employee Share Ownership (ESOW) plans if conditions for the incentive schemes are met.

Equity Remuneration Incentive Scheme (SMEs)

Equity Remuneration Incentive Scheme (All Corporations)

Equity Remuneration Incentive Scheme (Start-Ups)

You can enjoy 50% tax exemption on the gains arising from your ESOP/ESOW up to $10 million, over a period of ten years.

As announced in the Budget Statement 2013, this is applicable only for ESOP/ESOW granted on or before 31 Dec 2013 and for ESOP/ESOW gains derived on or before 31 Dec 2023.

Conditions apply.

You can enjoy tax exemption on the gains arising from your ESOP/ESOW up to $1 million, over a period of ten years.

As announced in the Budget Statement 2013, this is applicable only for ESOP/ESOW granted on or before 31 Dec 2013 and for ESOP/ESOW gains derived on or before 31 Dec 2023.

Tax exemption on the gains is computed as follows:

- full tax exemption on the first $2,000 of gains

- 25% tax exemption on the remaining amount of gains.

Conditions apply.

You can enjoy 75% of tax exemption on the gains arising from your ESOP/ESOW up to $10 million, over a period of ten years.

As announced in the Budget Statement 2013, this is applicable only for ESOP/ESOW granted on or before 15 Feb 2013 within the first three years of incorporation of the qualifying company and for ESOP/ESOW gains derived on or before 31 Dec 2023.

Conditions apply.

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