As part of its election platform, the federal Liberal party pledged to cap the amount that employees can claim as a stock option deduction, but indicated that “employees with up to $100,000 in annual stock option gains will be unaffected,” says a Hicks Morley ‘FTR Now.’. Finance Minister Bill Morneau has indicated that any such changes would only apply to stock options awarded after the date that the proposed changes are officially announced, which may be in the next few months. With the Liberals forming a majority government following the election, some commentators had suggested that employees may wish to exercise their outstanding stock options sooner rather than later to ensure that they benefit from the existing tax deduction rules. As for employers who utilize stock options as part of their compensation program, they should be aware that changes to tax rules may arrive early in 2016 that will make stock options less attractive to some employees than they have been in the past. Subject to good governance considerations, some employers may wish to consider whether it is possible to expedite 2016 grants to ensure that the options granted benefit from the current tax treatment. Hicks Morley says employers who utilize stock options may also wish to consider whether it is necessary or desirable to adjust the ‘mix’ of incentive compensation awards they provide to key employees given that the stock option deduction may soon be limited.
245 Fairview Mall Drive, Suite 501, Toronto, ON M2J 4T1