Canada stock option tax and cap of deduction | KPMG | GLOBAL

Canada: Changes for stock option taxation announced

Stock option tax changes in Canada

Canada’s new federal government will provide “grandfather” treatment for existing stock options, as it moves forward to act on its campaign promise to cap the amount that is eligible for the 50% stock option deduction. It was announced on 20 November 2015 that the potential measure on stock options will only take effect once the changes are released.


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The government will be reviewing the stock option measures in the next few months. Although the full details of the new stock option regime are not currently known, many affected taxpayers have been considering whether they need to exercise their stock options now and what this treatment could mean for them. Although it appears that stock options issued before the changes are announced will be grandfathered, the federal top marginal tax rate is still expected to increase by 4% in 2016. Accordingly, it would be expected taxpayers could save 2% federal tax by exercising the options in 2015.   


Read a November 2015 report prepared by the KPMG member firm in Canada: Anticipated Stock Option Changes — Government Announces Grandfathering

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