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Simplified Treatment for Stock Options

02 Sep 2002

1. Departing employees who have not exercised their stock options will be deemed to do so at the time they cease employment, and pay the taxes accordingly. If the gains when they actually exercise their options later on are lower than what was deemed, they can ask IRAS to refund the difference.

2. This ''deemed exercise'' rule simplifies the process for both employers and employees, while assuring the stock option holders that they will not be worse off. The earlier announced position had been to require employers to track their foreign employees when they leave the country until they exercise their stock options. The simplified process is the result of wide consultation with companies and tax practitioners on the implementation of this year's Budget measures.

3. Other implementation details announced by IRAS today include: allowing other forms of employee share ownership plans to qualify for concessionary tax treatment that was previously granted only to stock options, making it easier for companies to meet the requirements for the Company Stock Option (CSOP) incentive scheme, taxing stock option gains only when the options are granted for Singapore employment, and taxing stock options and share awards only when their selling restrictions end, where applicable.

4. Details can be found in the IRAS circular published at the following web-sites:

IRAS web-site

MOF web-site :

Please click here for the Summary of New Tax Treatment of Stock Options and Other Employee Share Ownership Plans