Companies that offer employee stock option plans should consider whether to make changes before new rules are enacted later in 2019.
In the 2019 federal budget, Finance announces that it will introduce a cap to the preferential personal tax treatment under the current employee stock option tax regime. Finance indicates that this cap would apply to stock option plans of "large, long-established, mature" companies, but does not include further details, which it says it will release before the summer of 2019. Finance also notes that any changes will only apply on a go-forward basis.
Although the budget announcement leaves some uncertainty as to how the rules will ultimately apply, companies may want to now consider the timing of granting stock options and other stock-based awards, in anticipation of full details of the new stock option cap. In addition, companies should prepare to implement tracking and monitoring for stock option grants and the application of the cap, to help differentiate the number of options eligible for the stock option deduction.
Download this edition of the TaxNewsFlash to learn more.
© 2019 KPMG LLP, a Canada limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.