Update on Proposed Amendments to Stock Option Rules

On June 17, 2019, the federal government tabled a notice of ways and means motion proposing legislative amendments to the stock option regime. Consistent with the intention announced in the 2019 federal budget, the draft legislation imposes a $200,000 annual limit on stock options that receive preferential tax treatment. When an employee exercises a stock option that exceeds the $200,000 cap (deemed by the draft legislation to be a “non-qualifying security”), the employee will not be entitled to claim a 50 percent deduction against the income inclusion. Instead, the resulting stock option benefit will be treated as a taxable employment benefit and will be taxed at ordinary rates, consistent with other forms of employment income.

On December 19, 2019, the federal government released an update on the status of the proposed amendments, announcing that the new regime will not come into force on the previously proposed date of January 1, 2020. Details about the new regime, including the new coming-into-force date, will be announced in the 2020 federal budget.

Prepared by: Jenna Himelfarb

Jenna is a partner practicing in the firm’s Toronto office. Jenna advises clients on the tax aspects of a wide variety of matters, including corporate reorganizations and restructurings, mergers and acquisitions and cross-border structures. She also practises in the areas… more »