3. Amendment of section 4 of the principal enactment

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

Section 4 of the principal enactment is hereby amended in subsection (1) of that section as follows :—

(1)

in the proviso to paragraph (d) of that section by the substitution for the words “shall be disregarded.”, of the words “shall be disregarded ; ” ; and

(2)

by the insertion immediately after paragraph (d) of the proviso to that subsection of the following paragraph :—

“(e) the value at the time of its disposal, of any share of a company, received as a benefit, from the employer or on behalf of the employer at no cost or at a price which is less than the prevailing market value of such share of a company whether directly or through a share option scheme ;

The value at the time of its disposal of such share shall be the surplus over the cost of acquisition of such share —

(i)

in the case of a sale, the sale price or the market value, of such share as at the date of sale, whchever is higher ;

(ii)

in the case of a disposal, otherwise than by way of sale, the market value of such share as at the date of disposal ;

(iii)

in the case of an employee ceasing to be in the employment of such employer, without selling or disposing of such share, the market value as at the last date of his employment with such employer which date shall be deemed to be the date of the disposal of such share :

Provided however, in the event of the death of such employee during his period of employment with such employer the value of such share shall be zero.

For the purpose of this paragraph the profits from employment arising in accordance with the preceeding provisions shall be charged with income tax in the year of assessment during which such sale, disposal or cessation of employment took place, on the basis that such profits from the sole taxable income within the meaning of Chapter VII for that year of assessment and such tax shall be recovered in accordance with the provisions of Chapter XIV of this Act :

Provided further, that where the employer was not instrumental in the disposal of such share such employee shall pay the tax due on such profit from employment in accordance with the provisions of

Chapter XIII of this Act.”.

Read on from s 4