The taxable amount is the increase in value on the proportion of the security remaining untaxed, rather than the full increase in value. So if 70% of the unrestricted value has been taxed on acquisition of the restricted security, only 30% of its later higher value will be taxed when the restriction is lifted.

To calculate the taxable amount on each occasion of a chargeable event a formula has been devised:

Taxable Amount = UMV x (IUP – PCP – OP) – CE, where

UMV (Unrestricted Market Value) is the market value of the securities immediately after the chargeable event assuming there were no restrictions on the securities.

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