If awards granted under a non-trustee plan (i.e., not granted under and approved (Section 102) trustee plan), tax at grant for RS; tax at sale for RSU. Taxable amount is fair market value of the shares on the tax event.
If awards granted under an approved (Section 102) trustee plan, taxed at sale for RS/RSU.
Taxable amount is the fair market value of the share on the tax event.
Under a non-trustee plan, employees are taxed at marginal rates on the tax event. In the case of RSU, it may be possible to apply for a ruling providing for the taxable event to be at vesting rather than sale. In this case, marginal rates would apply to fair market value of shares at vesting while capital gains tax rate would apply to any increase in value of shares between vesting and sale.
Under an approved trustee plan, the employer may elect either the income method or the capital gain method.
Under the income method, employees are taxed at marginal rates on sale proceeds.
Under the capital gain method, employees are taxed at marginal tax rates on the market value of the underlying shares at grant (or the sale proceeds, if less) and at capital gains tax rate on the additional gain at sale. Special deposit and lock up periods apply to trustee plans.
Under the capital gain method, taxable fair market value is calculated as the 30- day average price prior to the date of determination.
May be allowed with an approved trustee plan if subsidiary reimburses parent under written agreement. In such case, deduction is limited to the lesser of: (1) the reimbursement amount and (2) the portion of employee's gain that is taxed as ordinary income at marginal rates, i.e., the entire gain under the income method and a portion of the gain under the capital gain method - see Taxation of Employee section for further details. No expense will be allowed if the employee sells the underlying shares before the end of the two-year holding period.
Generally, not available with a non- trustee plan.
Income Tax:
Reporting and withholding at taxable event for non-trustee plans. Trustee is required to withhold and report at sale for approved trustee plan. In addition, an annual report of stock plan activity generally must be filed but filing obligation has been suspended.
Social Insurance Contributions:
Yes, employee and employer contributions due on non-trustee plans and on ordinary income portion under trustee plans (i.e., amount taxed at marginal rates), provided wage base is not exceeded.
Employer/trustee has to withhold employee's contributions.
Prospectus and reporting requirements generally apply if grants are made to more than 35 employees. The securities authorities are likely to grant an exemption under certain circumstances.
Self-executing exemptions may also apply to offers to more than 35 employees provided the value of the offering is under a specified threshold and certain other requirements are met.