Abstract
The South African Revenue Service is an autonomous tax collecting agency responsible for the administration of the South African tax system and customs service (SARS, 2019a). The South African Revenue Service is inter alia responsible for the administration of Income Tax payable by individual taxpayers (including directors) who are liable for personal income tax on an individual’s taxable income, commonly referred to as normal tax. Such income includes, inter alia, remuneration (income from employment) such as salaries, wages, bonuses, taxable fringe benefits, allowances, director’s fees etc. (SARS, 2019b). Employee share incentives are a useful way to compensate employees with financial products such as shares in addition to a salary in order to strengthen employee relations and to attract and retain key staff. The aim of this study is to gain an understanding of the consequences of the taxation of benefits that have been derived from share incentive schemes for directors. This study also explores whether there are different classes of directors and whether they may or may not suffer the same tax consequences despite or because of these differences. An important focus is on executive share incentive schemes and the workings of Sections 8A and 8C of the Income Tax Act, Act No. 58 of 1962, as amended, which deals respectively with the exercise of marketable securities and the vesting of equity instruments. The study also explores the taxation of share options in Australia and the extent the taxation may or may not correspond with the South African tax regime. Keywords: ‘director’, ‘equity instrument’, ‘executive director’, ‘executive share incentive schemes’, ‘non-executive director’, ‘marketable security’, ‘share option’, ‘share options in Australia’, ‘Section 8A’, ‘Section 8C’.
M.Com. (South African and International Tax)