China State Administration of Taxation has released a rule on how to tax the Stock Options Income.
Stock options income is divided by the number of months when the employee has been working in the company since he got the stock options, then calculate tax by referring the tax rate in tax table to the quotient. If the number of working months exceeds 12, the number of months is 12.
The day an employee gets stock options from the company is the authorized day, and the price of the stock options employee get from their company on the authorized day is the authorized price. The day an employee purchase his/her stock options is the exercise or purchase day, and the price of the stock options on the stock market on exercise or purchase day is the exercise or purchase price. The tax calculation formula is listed as below.
The tax amount = (Stock Option Taxable Amount / Number of Months
* Applicable tax rate - quick reckoning amount)
* Number of Months.
Please note that stock options income is different from other income types like salary and bonus, "tax paid by employer" is not suitable for it.
CN, Stock Options Income, TaxReason and Prerequisites
The node is released for customer ADP only so far, as long as ADP confirmed our solution with OK, we will release it for all customers.
To get the solution, please apply the corresponding support package.
Please goto IMG for implementation and read respective documentation of new payroll function.
The instructions of the modified and newly created processing class/wage types/rules/schemas/payroll functions are listed as follows.
1. An new processing class 70 has been integrated into the system, and specification 1 is added for stock options income tax calculation.
2. A new primary wage type MSOI with processing class "70" specification "1" is introduced in the system. This primary wage type can be maintained in infotype 0015(additional payment) or 0267(off-cycle payment).
It can be copied to customer wage type to suit customers requirements.
3. Secondary wage types /407, /494, /495 are created for calculating tax of stock option income.
4. Retroactive adjustment of stock options income.
Secondary wage types /A94, /Z94, /A47, and /Z47 are created to record the stock options income adjustment.
5. Calculation rules
The new calculation rule CNSS has been integrated into the system, using this rule, wage types /494 and /495 are generated as the taxable and tax rate base of stock options income.
CNL1 ---> processing of /A47 added
CNL2 ---> processing of /407 added
CNL3 ---> processing of /407 added
CNL5 ---> processing of /407, /494 and /495 added
CNL6 ---> processing of /A94 added
CNL7 ---> processing of /494, /495 added
CNL8 ---> processing of /494 added
CNL9 ---> processing of /Z94 added
CNLB ---> processing of /494 added
CNTX ---> Rule CNSS and new function CNSOT added
CNTG ---> Rule CNSS and new function CNSOT added
|Release Status:||Released for Customer|
|Released on:||20.03.2006 09:16:53|
|Priority:||Correction with high priority|
|Primary Component:||PY-CN China|
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