OK, bear with me, this might get confusing, it in involves.......TAX.....

So I work for an Australian mining company, they have offered us an Company Options under an Employee Option Scheme, in which they offer us "x" amount of options to at a fixed value, lets say for argument sake it is $AUD1. The options are split into a vesting period over 2 years, half of the options vest this year, the other half next year.

Normally with these options, the vesting period comes around, you find the money you need to buy the options,(or the broker pays for them with "House" money and you pay him back etc etc) then you convert them into shares.

This time our company has offered a "Cashless Exercise" facility, in which they take the cost of the exercising the options out of the allotted shares. For example: I have been given 10 options at a cost of $1 each, they are currently valued at $5, I am required to pay the company $10 to convert the options to shares. But instead, i don't have $10, so they offer to take $10 worth of shares and give me the reaming converted shares, that being 8 valued on that day $40.

My question is how does that affect my tax. As I understood it, I get taxed on the value of the options on the vesting date. But how do I calculate that value?