21Effect of rescission, cancellation of share or option

21 Effect of rescission, cancellation of share or option (1) If the grant of a share or option is withdrawn, cancelled or exchanged before the vesting date for any valuable consideration (other than the grant of other shares or options)— (a) the date of withdrawal, cancellation or exchange is taken to be the vesting date of the share or option; and (b) the market value of the share or option, on the vesting date, is taken to be the amount of the valuable consideration (and, accordingly, that amount is the amount paid or payable as wages on that date). (2) If an employer includes the value of a grant of a share or option in the taxable wages of the employer for a financial year and the grant is rescinded because the conditions attaching to the grant were not met, the taxable wages of the employer, in the financial year in which the grant is rescinded, must be reduced by the value of the grant as previously included in the taxable wages of the employer. (3) Subsection (2) does not apply just because an employee fails to exercise an option or to otherwise exercise the employee’s rights in relation to a share or option.