Tax Related Matters by Annalize Barnard
When you become entitled to receive the benefits that are due to you, the first half on 1 February 2018 and
the second half on 1 February 2019, tax will become payable on the benefits that you receive.
How will my tax be calculated?
The tax that you pay depends on all of the money that you earn in the course of a tax year. This could be
money earned from your employment, such as your salary, or from any other source – like rent you receive
from a tenant or money that you earn selling cakes at a market. The total amount of money that you earn
determines the tax bracket that you fall into.
The table below contains the tax brackets for individuals in South Africa for the tax year ending February 2018.
If, for example, your current taxable income is R200 000, it means you currently fall in the second tax bracket and your tax is calculated as R34 178 + 26% of the amount above R189 880 (R36 809).
However, if the gain on your ESOP shares is R100 000, you will move into a higher tax bracket as your total taxable income for the year would have increased to R300 000. Your tax for the year will then be calculated as R61 910 + 31% of the amount of R 296 540 (R62 982).
Investec will find out how much you will owe in tax on your ESOP benefits by asking SARS (or the tax authority of the country that you live in) for a tax directive. If you think that the tax that is paid over on your behalf has been incorrectly calculated then this is an issue that you must take up with SARS. It is not something that Investec or the trust (or Clicks) can resolve for you. The tax directive is the final word as far as the trust is concerned in calculating the amount of tax that must be paid over, and the trust cannot challenge the tax directive or refuse to comply with it. The trust must pay the amount of tax that is set out in the tax directive to SARS before paying any money over to you.
All shareholders irrespective of which shares they hold will pay transaction costs (just like having a bank account attracts bank charges). Transaction costs will be deducted prior to you receiving your payout.