You have to pay salaries tax on any benefits associated with stock-based awards arising from your office or employment. If you are granted the right to acquire shares within a period of time in the future i. This is assessed not when the option is granted to you but when you exercise, assign or release that option.

Shares awarded to you not in the form of options may also give rise to a benefit assessable as a perquisite under section 9 1 a of the IRO. If so, you will be assessed in the year you are fully entitled to the benefits of the shares. Both you and your employer must observe the reporting requirements in the returns. Failure to do so may result in heavy penalties.

However, any gain or loss you realise from the subsequent sale of the shares is usually non-taxable or non-deductible.

The granting of share or stock awards constitutes taxable perquisites. The time when the benefit is derived and the value of that benefit for tax purposes are generally determined by the terms governing the awards and the circumstances under which the awards are granted.

If the shares are awarded to you free of charge, the market price of those shares must be included in your assessable income i. Mr A left Company X on 28 February It can reflect the true value of options that have not been traded for a long period of time, allowing investors to avoid making wrong investment decisions due to large deviations from the market price and true value. If you hold options on Hong Kong shares, the problem could be caused by the inconsistency of the reference benchmark and does not affect your actual assets.

Know the key terms in option trading

Option settlement price Due to inactive trading, there may be situations where the price of the underlying stock changes during the trading session, but the price of the option remains unchanged. Common questions 2. Why is the sum not equal to the current total assets? Sorry about that, why was this article not helpful?

The List of Stock Option Classes Available for Trading

This article didn't answer my question or solve my problem Too much information The description is too abstract to understand Submit Cancel. Failure to do so may result in heavy penalties.

However, any gain or loss you realise from the subsequent sale of the shares is usually non-taxable or non-deductible. The granting of share or stock awards constitutes taxable perquisites. The time when the benefit is derived and the value of that benefit for tax purposes are generally determined by the terms governing the awards and the circumstances under which the awards are granted.

If the shares are awarded to you free of charge, the market price of those shares must be included in your assessable income i. Mr A left Company X on 28 February Hence, neither the employer nor the employee has to report any gain or loss from the actual sale of the shares.

Company Y is the parent company of Company X. There are many types of share option schemes. In broad terms, the tax benefit of the share option is the difference between the price paid and the market price at the time of exercise. For the assignment or release of share options, the tax benefit is usually the actual amount of money that you receive from that assignment or release, less the costs for acquiring the option, if any.

Company X is listed in Hong Kong.