Approved Share Scheme- form 11

How do I report the fact that I invested in an approved Employee Share Option Plan on my Form 11? I cannot find where this should be entered.
Thanks JR

To complicate this question:
- part of the sum invested came from my bonus and never showed up as income for the year, either in my payslip or on my P60
- part of the sum was deducted from my salary and therefore showed up in both my P60 and payslip.

Any thoughts would be greatly appreciated.

I'll post here in the hope it might prompt others to correct/verify my points and to help you. I know little about this topic, but am trying to tackle the same.

I assume your concern is wrt to having a tax liability?

If so you may have a liability if you :
Sold shares and made a profit/gain - Capital Gain Tax
Purchased them at a discount - BIK
Earned dividends - Income tax

Share options exercised by an employee under a Revenue approved share option scheme are not subject to income tax, but subject to CGT on the full gain on disposal. There is no reporting requirement specific to these share options but you can include it in section M of the F11 return, chargeable assets acquired in 2009.
It is important that the scheme you acquired the shares under is in fact a revenue approved share option scheme. Otherwise the taxation changes completely.

On that basis if a scheme is Revenue approved :

Do you mean,one is not subject to income tax on dividends from these shares? From a bit of checking - income tax is still due on the dividends.
Do you also mean if the option included a discount that no tax is due from the BIK also? I think this is what you were referring to. I found a document linked to here which details what you were saying http://www.citizensinformation.ie/c...and-investments/employee-share-option-schemes

Thanks

OK, dividends are a separate matter. Dividends are income arising from a share and are subject to income tax. This must be returned on the form 11.

This is a link to the technical details of approved share option schemes: www.revenue.ie/en/practitioner/tech-guide/sobook.pdf
It might be too detailed to go into here but basically a BIK charge to tax does not arise if the scheme is indeed a Revenue approved one. As you will see from the leaflet, there can be no discount when the right is given in order for the scheme to be approved. However, when the options are exercised, the share price will (hopefully) have increased giving rise to a gain. This gain would be subject to income tax if the scheme was an unapproved one but is relieved from income tax for approved schemes. This is a rough overview of the position. I hope it makes sense?

www.thomaskane.ie

Thomas, thanks very much for the info. I might open a separate thread with some questions, feel free to respond

JR , hope my 'hijacking' has helped you!

Hi Majj,
no problem, indeed it kickstarted the conversation.

Actually, my main concern is how to report my income for 2009. If I report my full income for 2009, I will be expected to pay tax on it all. How do I communicate to Revenue that part of it was used to purchase shares via this scheme and that therefore no tax should apply to that amount ? This is further complicated by the facts set out in Post 2.

Hopefully someone can shed light on this.
Thanks,
JR

jrewing said:

Actually, my main concern is how to report my income for 2009. If I report my full income for 2009, I will be expected to pay tax on it all. How do I communicate to Revenue that part of it was used to purchase shares via this scheme and that therefore no tax should apply to that amount ?

Click to expand...

Hi JR,

The amount of your salary you used to buy the shares is taxable. With a share option you are given the option to buy a share at a certain price, say €1 per share. When that share is worth say €1.50 you exercise your option, thereby purchasing a share worth €1.50 for €1. You have made an instant gain of €0.50 on the share. Under an unapproved share option scheme this €0.50 is liable to income tax. Under an approved scheme it is relieved and not subject to income tax.
Now if you purchased that share with your own cash (not deducted from your salary) the cash you used to purchase the share would have suffered income tax when you received it. So, in the same way, your employer is right to have taxed the salary you used to purchase the shares. I hope this makes sense.
If your bonus was paid in the following tax year it wouldnt show up on your P60 for the year in question but would be included in the following years P60.

Regards
T

www.thomaskane.ie