Equity Compensation and Tax
The calculation of equity compensation taxes has become increasingly complicated due to the range of tax rates, cut-offs and bands in operation.
The increased popularity of multinational and multi-state workforces also adds another level of complexity, variation and work for many companies’ tax calculations today.
The EquityAdmin tax module simplifies this process to enable companies to save time, money and to streamline the whole equity compensation process around employees that are constantly on the move.
A Mobile Workforce
In today’s global economy, employees are often seconded to corporate locations outside of their country of residence.
In many instances these assignments are deemed to be opportunities and benefits from the employees’ perspective.
Global Shares has comprehensive knowledge of the effects of employee mobility and what it means for businesses into today’s competitive candidate marketplace.
Simplify your equity compensation plan taxation with Global Shares Software Solutions.
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What is the EquityAdmin Tax module?
The EquityAdmin tax module is a dynamic, user friendly and accurate software tool which takes the hassle out of calculating a participant’s tax at the time of a transaction.
Transactions include, but are not limited to, option exercise, restricted stock release and dividend pay-outs.
The EquityAdmin tax module has the ability to use uploaded year-to-date compensation amounts as the base and adds income from transactions to provide companies with the correct tax amount due from the participant.
As employees constantly have to move across countries, states and even within departments and business units our tax module adapts to take national, regional and local taxes into account. It also calculates variations, such as different tax bands.
Store & calculate taxes
Taxes can be loaded into the EquityAdmin tax module to enable you to calculate an individual’s tax liability for a whole range of transactions.
You simply select the participant, the transaction and grant type and enter the taxable amount into the calculator to get a full breakdown of the participant’s tax liabilities.
The system shows each individual tax item associated with the participant and the amount of tax due.
Setup taxes by tax code or assign down to location
Taxes are stored in EquityAdmin and whether your company operates by using tax codes or by location, the EquityAdmin tax module accommodates this.
The system uses the participant’s details to establish all applicable taxes.
This level of flexibility is particularly beneficial for multinational or multi-state companies and you can rest assured that the system differentiates between country or state variances.
View your taxesAll participants can view their tax rates on their equity portal.These can be accompanied by concise explanations of how the taxes will be applied to income generated from transactions keeping participants up to speed with the tax implications of all transactions.This information keeps participant queries about taxes and transactions to a minimum.
Year-to-date amounts incorporated
Year-to-date amounts can be loaded into EquityAdmin to ensure that income from transactions is combined with the participant’s existing compensation income to calculate the correct taxes.
This is hugely beneficial for companies with participants who work in countries or states with varying tax levels, bands and cut-offs.
This saves significant time for payroll staff as any income arising from transactions incorporates the year-to-date amounts to produce the correct tax calculations ready for payroll to process at the time of the transaction.
New Medicare Tax Rate
The EquityAdmin tax module has been fully enabled to cater for the new Medicare tax rate.
The tax module uses the year to date amounts to identify the $200,000 threshold and correctly applies the additional 0.9% tax rate on all income which exceeds this.
The EquityAdmin tax module is flexible and dynamic and can cater for any changes to the tax system as soon as they are implemented in any applicable country.
The Global Shares’ EquityAdmin solution integrates fully with HRIS platforms, facilitating prompt data updates which are crucial for proper tracking of employee tax mobility cases.
It tracks an employee’s movement with effective date management allowing for quick and simple data retrieval.
It can also determine where an employee was located when they received a reward three years previously.
EquityAdmin quickly accesses details when participants transacted on this same award and our audit trail history is available for your auditors on request.