ACCA Advanced Taxation (ATX) Practice Exam

Disable ads (and more) with a membership for a one time $4.99 payment

Prepare for the ACCA Advanced Taxation Exam. Use interactive flashcards and multiple-choice questions, complete with hints and comprehensive explanations. Ensure your success on exam day!

Practice this question and more.

For the Share Incentive Plan (SIP), how long must employees hold shares to be exempt from Income Tax and Capital Gains Tax?

1 year
3 years
5 years
10 years

The correct answer is: 5 years

For the Share Incentive Plan (SIP), employees must hold shares for a minimum of five years to benefit from the exemption from Income Tax and Capital Gains Tax. This holding period is a key feature of the SIP, designed to encourage longer-term investment and participation in the company by employees. By holding shares for this duration, employees are rewarded with tax advantages, which is an important aspect of the plan aimed at promoting employee engagement and retention. Understanding this requirement is essential, as it emphasizes the plan's objective of fostering a culture of shared ownership and aligning employee interests with those of the company. Therefore, to fully capitalize on the tax benefits offered by the SIP, employees must be aware of the five-year holding requirement.