Stock option deduction

Tax Topics
1

If someone got a taxable benefit reported on their T4 with additonal tax deduction from stock option they exercised, can they claim the 50% deduction? Not a CCPC stock.

2

If the person meets certain conditions the securities options deduction can be available to employees of non-ccpc’s.

  • The stock option must be for common shares
  • The strike price must have been at least equal to the FMV of the common shares when the options were granted
  • The employer and employee must deal at arms length.
  • If the options were granted after June 30, 2021 there is a 200,000 deduction limit per calendar year.

If the person is still employed with the company when the option is exercised the employer generally determines whether the 110(1)(d) or 110(1)(d.1) deductions are available and reports the deductible amount in either box 39 or 41 of the T4 slip.

3

Thanks. Since there is nothing in box 41 I am assuming the stocks were offered below FMV. And there is also additonal tax deduction on the slip it means the person sold the shares? Otherwise there would only be a taxable benefit without additional tax deduction.

4

FYI beware there’s new rules now that includes 100% of the options for AMT purposes moving forward.

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5

I have a different situation. One of a new clients Canadian employer went to public and he was stationed in USA in Sep 2023, received pay in Canada and that is declared in his T4A.
He got RSUs. The benefit is declared in his Canadian T4 but no tax is deducted. Same benefit is also declared in USW2 (only income on W2) and $24k tax is deducted.
This results into doubling over $100k income. Income is added twice but tax once.
How to deal with this situation? Spoke with CRA, no help. Employer said T4 is correct and being a Canadian resident RSU benefits were to be added to T4.
Any idea?