Feds delay changes to employee stock option deductions

The federal government is delaying proposed changes to employee stock options that were planned to take effect on Jan. 1.

A Department of Finance release on Thursday said the government is reviewing industry feedback on the proposal introduced in the March 2019 federal budget.

Details on the measure, including a new coming-into-force date, will be announced in the 2020 budget. The delay will give individuals and businesses time to review and adjust to the new rules, the release said.

Finance Minister Bill Morneau introduced draft legislation for the changes in June, and the Department of Finance consulted with industry on the proposals over the summer.

“We will carefully consider the views of stakeholders as we move forward to ensure that Canada’s tax system is being used to support jobs and growth, rather than creating unfair tax advantages that disproportionately benefit the wealthy,” Morneau said in a statement.

The draft legislation proposed a $200,000 annual limit for certain companies on employee stock option grants that can be taxed effectively at the capital gains rate. The limit will not apply to Canadian-controlled private corporations.

The Finance Department says the changes are designed to ensure that smaller businesses can use stock options to attract talent as they grow and expand, while preventing executives at large companies from benefiting.

Mark Burgess

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Mark was the managing editor of Advisor.ca from 2017 to 2024.