Topical Questions

Deferral of income tax on the exercise of a Share Option(s)

If an individual wishes to defer payment of the income tax due on the gain arising on the exercise of a share option(s) what information must be included on a Return of Income?

An election to defer payment of income tax due on the gain arising on the exercise of a share option(s) must be made in writing to the Inspector by the normal return filing date, after the end of the relevant year of assessment.

The total amount chargeable to income tax, as a result of the exercise of a share option(s) for the individual and/or their spouse for the relevant year of assessment must be included on the Return of Income. The individual can then elect to defer payment of some or all of the income tax due for the individual and/or their spouse, by ticking the appropriate box on the Return of Income, or in writing to the Inspector and stating in either case the amount of income tax they wish to defer.

Release of Share Options

If a cash payment is received by an option holder on the release of a share option how is the income tax paid?

Where a person realises a gain by the exercise, assignment or release of, a share option obtained by that person on or after the 6 April 1986, as a director or employee of a company, that person will be chargeable to tax under Schedule E for the year of assessment in which the gain is so realised, as a chargeable person.

Notwithstanding this any cash payment chargeable under Schedule E, by virtue of the release of a share option, should be paid through the company payroll and is subject to PAYE and PRSI in the normal manner.