# Tax treatment of "bonus" shares under employer share scheme



## DB Dub (14 Dec 2011)

I have a query about income tax and CGT on my employer's share scheme

*Share Scheme*
Share scheme goes like this

1: you buy shares at the market rate from after tax salary 
e.g. 100 shares at €1 each

2: if you keep them for 3 years, the company awards you a matching number of shares for the shares bought three years previously
In the example I receive 100 shares
Lets say the market value is now €1.50 per share - so the matched shares have a nominal value of €150

3: the original and matching shares are now unrestricted i.e. you are free to sell them whenever you want

*Tax implications at these points in time*
point 1: none
point 2: I pay income tax at 41% on the nominal market value of the matched shares received. In the example this is 100 shares * €1.50 * 41% = €61
point 3: I pay capital gains tax at 25% on shares sold 

*Query*
a: As far as I can see from the revenue.ie info - when the shares are matched - for CGT purposes – I am considered to have bought 200 shares at €100 (i.e. the outlay on the original 100 shares)

b: lets say I sell all shares at €2 per share
the capital gain would be €400 (sale price) - €100 (purchase price)
so CGT is €300 * 25% = €75
note: _for simplicity purposes I am ignoring such detail as offsetting cost of acquisition and sale_

c: However, I paid €61 income tax on being granted the matching shares (i.e. at point 2 above)

*Questions*: 
1: Is the nominal value of the matching shares at the time of their award taken into account in any way in the CGT calculation

2: is the income tax I paid on this nominal value of the matching shares taken into account in any way in the CGT calculation
e.g. as a cost of enhancement


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## mandelbrot (14 Dec 2011)

Simple answer, no.


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