Equity for Management 2 ed.

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• INTRODUCTION
  • Acknowledgement
  • Terminology
  • Equality And Certainty
• 1. RIGHT UNDER AGREEMENT
  • The Agreement
  • The Offer
• 2. BENEFIT COMPUTATION
  • Eligibility
  • Measurement
  • Benefit Of Vested Person
  • Safe Harbour For Agreement
  • Benefit Upon Conversion
  • Benefit Upon Death
  • Benefit Deferral CCPC
  • Foreign Exchange
• 3. BENEFIT OUTSIDE S 7
  • General Rule
  • Employment
  • Benefit Outside Employment
• 4. BENEFIT FROM TRUST
  • Share Trusts
  • Purchase Arrangements
  • Holding Arrangements
  • EBP
  • Other Plans
  • Otherwise Trusts
• 5. OPTION TRANSFER
  • Preliminary
  • Rights Becoming Vested
  • Vested In Person
  • By One Or More Transactions
  • Between Persons Not Dealing At Arm's Length
  • Death Of The Taxpayer
  • Safe Harbour
  • Transferee
  • Holding Company Examples
• 6. OPTION CHANGE AND EXCHANGE
  • Option Changes
  • Option Exchanges
• 7. OPTION TERMINATION
  • Option Surrenders
  • Rights Ceasing To Be Exercisable
• 8. SHARE BENEFIT
  • Classification
  • Share Bonus
  • Share Acquisition
  • Restricted Shares
  • CCPC Share Dispositions
  • Selling Deferred Shares
  • Deferred Share Exchanges
• 9. BENEFIT DEDUCTION
  • Introduction
  • Arm's Length Requirement
  • Price Requirement
  • Election By Employer To Forego Deduction
  • Price Changes
  • Repricing Amendments
  • Gift Of Securities
• 10. NON-QUALIFIED SECURITY
  • Basic Rules
  • Timing
  • Formula
  • Designation
  • Vesting Year
  • Vesting Year Modification
  • Deemed Order Of Acquisition
  • Employer Deduction
  • Calculator
• 11. PRESCRIBED SHARE
  • Preamble
  • Definition
  • Acquisitions
  • Swaps
  • Share Agreements
• 12. SDA
  • General
  • Constructive Receipt
  • Salary Deferral Arrangement
  • Section 7 Rights
  • Appreciation Rights
  • Share-based Dividend Equivalents
  • Supplementary Pension
  • Other Deferrals
• 13. DSU
  • Exception SDA
  • DSU Typical Plans
  • DSU Director Plans
  • Initiating Arrangement
  • Investment Tracking
  • Valuation Of Units
  • End Of Employment
• 14. RSU
  • Focus
  • SDA Exception
• 15. UNIT EXCHANGE
  • Plan Continuity
  • Transaction Type
  • Conversion
  • 409A Maturity
  • Unit Modification
  • Dependent Share Changes
  • Plan Winding-up
  • Reassessment
• 16. EMPLOYER DEDUCTION
  • Expensing
  • Option Expenditures
  • Share Expenditures
  • Capital Expenditures
  • Option Settlement Costs
  • Recharging
• 17. WITHHOLDING
  • Overview
  • Reporting
  • Statutory Basis
  • Withholding Waivers
  • Settlements
  • Non-residents
• 18. INTERNATIONAL
  • Non-resident Benefit
  • US Treaty Benefit
  • Emigration And Immigration
• 19. MONETIZATION
  • Direct Exit
  • Tracking Shares
  • Paid-up Capital
  • Drawing Liquidity
  • Settling Arrangement With Shares
  • Marketmaking
• EQUITY STRUCTURES
  • Newsletter Releases
  • EPSP For Start-up Reallocation
  • Marketmaking Trust For Incentive Plans
  • RCA For Employee Buyout
  • Exits For Options
  • Option Transfer To Holding Corporation
  • Loans For Startups
  • Returning Share Capital
  • Tracking Shares For Carried Interest
  • Transaction Incentive
  • M&A Transactions
  • Offside Option Exchanges
  • Open Market Shares
  • Trusts Holding Shares For Managers
  • What Is A Legally-binding Agreement?
  • Cost Erosion In Share Transactions
  • Key Employee Share Grant
• MODEL CLAUSES
  • Omnibus Plan Model
• CONFERENCES
  • RCA For Non-resident
  • Constructive Receipts
  • Tracking Share
  • Otherwise Trust
  • Discretionary Employee Trust
• LIVESTREAM
  • Next Event Announced July 15, 2025
• READER QUESTIONS
  • Submission Form

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• INTRODUCTION §1001 - §1003
  • Acknowledgement
    • §1001  author—biography
  • Terminology
    • §1002  shares—agency—directorate—the Act
  • Equality And Certainty
    • §1003  plans covered by commentary—regulatory environment—"fiat" guidance—rule of law—uncertainty—ad hoc guidance—responsibility
• 1. RIGHT UNDER AGREEMENT §1004 - §1052
  • The Agreement
    • Overview
      • §1004  meaning of agreement—provisions incorporating agreement concept—evolution of caselaw and agency policy—shares as incentive not salary
    • CRA Current Policy
      • §1005  review of cases—which type of agreement?—agency endorsement of legally-binding agreement condition—condition as break in historic interpretation
    • History
      • Before 1953
        • §1006  taxable benefit value at date of grant of option—1953 stock benefit scheme, date of acquisition of shares—statutory design
      • Legislative Provisions
        • §1007  comparison to current provisions—expansion of text
      • Joint Committee Recommendations
        • §1008  concern over benefit resulting from obligation to buy shares—concern over residual exposure to tax in year of grant of option—bill amended to address double tax concern
      • 1953-1971
        • §1009  1953 legislation, full inclusion, special rate for stock benefits, special averaging—Carter commission, general averaging, full inclusion of stock benefit—1971 reform, full inclusion, general averaging
    • Formal Plan
      • N. W. Fowler TAB
        • §1010  no agreement under discretionary plan—formal agreement required—bonus plans accepted by agency 1980—consistent with current policy post-Transalta
    • Verbal Arrangement
      • Aylward TCC
        • §1011  verbal agreement, documentation subsequent—agreement during employment—enforceable obligation?
    • Plan Or Benefit
      • Chrysler FCTD
        • §1012  stock agreement or employee benefit plan—oral or implied agreement sufficient—stock benefit provisions more specific, override inferred
    • Plan Intent
      • Placer Dome FCA
        • §1013  contributory stock purchase plan—recast as stock option agreement, discount price—employer deduction precluded
    • Time Of Agreement
      • McAnulty TCC
        • §1014  benefit deduction—fair market value—date of agreement—date of verbal commitment—date of board approval
        • §1015  meaning—binding or compliant, or both—indoor management rule—verbal allocation—plan authorization—board approval as requirement
    • Leverage Acquisition
      • Gesser Estate FCA
        • §1016  share acquisition—no recourse loan—purchase of shares by employee—reconstructed as employee option—loan forgiven
    • Transalta TCC
      • Plan Terms
        • §1017  stock appreciation award—conditional on comparative stock performance—award discretionary under plan terms
      • Obligation
        • §1018  agreement to issue shares—legally-binding agreement—discretion to settle shares or cash
      • Contract
        • §1019  no prior unilateral contract—expenditure deductible, share settlement
      • Precedent?
        • §1020  agreement when offer made—agreement when discretion exercised—board approval—promissory estoppel
    • Directorate Policy
      • Discretionary Share Bonus Plan
        • §1021  award fully discretionary—discretion as to quantum and cash or share settlement—where employer later commits to issue of shares, binding agreement
      • Informal Undertaking
        • §1022  no binding commitment—allocation of shares, no specific award—notice instituting right to exercise option—no agreement prior to notice
      • Deferred Compensation
        • §1023  settlement of DSU units in shares, no agreement if employer can elect cash or shares—reversal of policy, no agreement even if shares issued—expense not deductible
      • Share Bonus Plan
        • §1024  discretionary bonus—partial discretion exercised before settlement—agreement to issue shares where employer binds itself
      • Deferred Stock Grant
        • §1025  right to shares—acquisition deferred for fixed period—agreement, cost not deductible—structured as restricted share bonus, cost deductible
      • Restricted Stock
        • §1026  stock issued or to be issued subject to restriction—no discretion—agreement to issue shares, cost not deductible
      • Stock Appreciation Right
        • §1027  settlement cash or treasury shares or combination—discretion, no agreement, no deduction of cost
      • Performance Shares
        • §1028  performance shares, award within range—range determined at maturity—discretion for quantum—discretion for cash or shares—agreement to issue shares, cost not deductible
      • Employee Share Purchase Plan
        • §1029  offer to subscribe for any number of shares—employer bound to accept subscription—agreement, discount not deductible—discretion to accept subscription
      • Agreement As Employment Benefit
        • §1030  employer promise—terms of benefit program—discretion unessential to promise
    • Legally-binding Requirement
      • Overview
        • §1031  how to interpret—company law—contract—employment law—stock benefit plans
      • Legal Meaning
        • §1032  as boilerplate—as tautology—negative discretion—substantial significance—discretion over fundamental terms
      • Informal Agreement
        • §1033  written or verbal—formal or informal contract—unilateral or bilateral—documentary audit
      • Acceptance
        • §1034  unilateral contract—formal acceptance not required—acceptance under financial standards—fair market value
      • Corporate Procedures
        • §1035  corporate approval steps—when agreement becomes binding—non-discretionary award
      • Shareholder Approval
        • §1036  directorate policy—shareholder approval—binding obligation—condition precedent
      • Employer Obligation
        • §1037  employment contract—right to benefit—right to shares—implicit conditions of employment—no primacy of corporate law
      • Proof
        • §1038  evidentiary standard for award—GAAP, FASB—Internal Revenue Code—option backdating—reporting stock option
      • Condition Precedent
        • §1039  true condition precedent—stock option agreement—employment contract—source of obligation
      • Plan Discretion
        • §1040  omnibus plans—change in control event—alteration of awards—disposition
      • Benefit Delivery
        • §1041  question of fact—legal or material—when benefit received or enjoyed—former policy
  • The Offer
    • Specific Number Of Shares, Specific Price
      • §1042  time of agreement, specific shares for specific price—contrast with maximum, minimum rule under IRC—double specifics as legally-binding grant—agreement specific when benefit otherwise taxable
    • Variable Compensation
      • §1043  pool of shares, contingent award—variable number of shares as earned—anti-dilution trigger—double specifics, fixed or determinable number
    • Share Purchase Plans
      • §1044  unilateral offer under employee share purchase plan—time of agreement, unilateral offer or subscription—specific if determinable—specific as determined
    • Capped Award
      • §1045  grant reduced if value exceeds threshold—different number of shares, different price—binding agreement to issue undefined number of shares—capped award, as share-based benefit or financial award—price guarantees
    • Limited Recourse Loans
      • §1046  soft sale of shares—shares held by trust pending payment—treated as option under IFRS—double specifics requirement—no fixed price before final settlement
    • Specific For All Outcomes?
      • §1047  agreement not specific for all outcomes—legally-binding for the outcome that happens—different agreements for different outcomes
    • Specific For All Holders?
      • §1048  post-transfer price—agreement no longer compliant—exercisability by transferee—compliance for employee—attribution rules
    • Formula Price
      • §1049  price determinable under formula—agreement in existence from outset—agreement compliant with value requirement if actual exercise price compliant—discount price countenanced as being specific
    • Variable Award
      • Net Share Settlement
        • §1050  net settlement as benefit in kind—net settlement as zero price option—determinable number of shares—CCPC benefit deferral—benefit deduction—deductibility
      • Net Of Tax Settlement
        • §1051  settlement net of withholding—fewer number of shares, difference remitted as withholding—net shares as determinable number—settlement as consideration for rights surrender—source deduction not deductible?
      • Discretionary Adjustments
        • §1052  award of shares increased up to maximum based on objective benchmark—impact of discretionary criterion
• 2. BENEFIT COMPUTATION §1053 - §1098
  • Eligibility
    • Overview
      • §1053  grantor, issuer and employer—grantor not necessarily issuer or employer—"particular qualifying person"—amount paid on issue or sale
    • Qualifying Person
      • §1054  employee of partnership—qualifying corporation as corporate partner—specific employment
  • Measurement
    • Basic Rules
      • §1058  benefit inclusion—acquisition of shares—value—disposition of rights—death—attribution
    • Acquisition Of Shares
      • §1059  excess of value of shares at time of acquisition over amount paid for shares—amount paid for right to acquire shares deducted from benefit—valuation of share—holdback and earnout—safe harbour
    • Disposition Of Rights Under Agreement
      • Arm's Length Transferee
        • §1060  transferee, any corporate or individual dealing at arm's length—overlap 7(1)(b) and 7(1)(a)—transfer as disposition—expiry—capital loss
      • Non Arm's Lenght Corporate Transferee
        • §1061  corporate transferee not dealing at arm's length, mutual fund trust—overlap with transfer to vested person
    • Benefit As Compensation
      • §1061.2  benefit as compensation under pension plan—not necessarily compensation with particular employer if employment deemed continued—vested person after employee's death, employed with particular employer?
  • Benefit Of Vested Person
    • Acquisition Of Shares
      • §1062  benefit attributed to transferor—no benefit on transfer to vested person, safe harbour—benefit computation, value less amount paid by last vested person—asymmetry in vested person attribution
    • Disposition Of Rights
      • §1063  safe harbour for consideration received by employee for transfer to individual—no benefit if subsequent transfer without consideration—reassignment of option to other employees
    • Transfer To Corporation Not Dealing At Arm's Length
      • §1064  transfer to corporation not dealing at arm's length, transfer to vested person—subsequent transfer, exposure to double liability?
    • "A" Or "The" Particular Transferee
      • §1065  acceleration of benefit, transfer to "a" particular qualifying person—explanatory notes, transfer to employer—drafting ambiguity
  • Safe Harbour For Agreement
    • Overview
      • §1066  no benefit under agreement except as stock benefit—benefits under all provisions—double benefits and escaping benefits
    • Drafting Mismatch
      • §1067  not same language as preamble of benefit provisions—the person or the qualifying person, trusts
    • Coincidental Liability
      • §1068  no deemed dividend on paid-up capital increase of shares issued as benefit—agency policies on safe harbour
    • Exclusive Charge
      • §1068.1  agreements inside preamble—safe harbour—transfer to corporation not dealing at arm's length, no liability prior to amendment
    • Concurrent Taxation
      • §1068.2  scope of safe harbour—excluded property—capital gain taxation—legislative intent—complete code
    • Double Liability
      • §1069  benefit on acquisition of shares, benefit on disposition of rights—two sources of liability—construction of Act, no double inclusion—if no benefit, rights as capital property—no disposition on exercise of option
  • Benefit Upon Conversion
    • Convertibility
      • §1070  note delivered as bonus—convertibility feature—conversion as exercise of rights
    • Debenture
      • Mansfield FCTD
        • §1071  debenture convertible into shares—taxation of stock benefit upon exercise
      • Mansfield FCA
        • §1072  benefit derived by virtue of employment—benefit equal to excess of debenture value over principal amount—amount paid for shares not the value of debenture given up
    • Share
      • Feature Of Share
        • §1073  convertible share, not agreement to issue share—convertibility inseverable as option—convertible share assimilable to convertible note or debenture—policy reversal, benefit recognized upon conversion
      • Forward Participating Share
        • §1074  forward participating share, ruling policy rescinded—share as option, convertibility not feature of share—forward participation without convertibility—benefit valuation—no offer of shares
  • Benefit Upon Death
    • Overview
      • §1075  provision introduced May 1991—right under agreement neither capital property, nor right to amount—loophole closed
    • Option Not Capital Property
      • §1076  options not capital property—policy changed to require factual determination—at specific time of death, whether capital gain would result from disposition—other stock-based rights, liability upon vesting
    • Outstanding At Death
      • Non-periodic "Rights Or Things"
        • §1077  option agreements, cash or share settlement—right to cash as "rights or things"—option right "realized" following death—employment rights as "rights or things"—employee compensation plans as "rights or things"
      • Periodic Payments
        • §1078  interest, rent, royalty, annuity, remuneration—annual bonus—share agreement or bonus agreement
      • Conflict And Primacy
        • §1079  overlap subdivisions a and f—option cashout or share bonus—conflicting valuation times, at death, immediately after death—stock benefit provisions paramount
    • Modification Rights Upon Death
      • §1080  modification of rights following death—modification as commutation, disposition—applicability of deemed disposition if right extinguished—applicability to unvested rights
    • Example: Agreement Modification
      • §1081  unvested option buyback—option ceasing to exist—cashout after death
    • Measurement Of Benefit
      • Cost Aggregation
        • §1082  deemed disposition agreement-by-agreement—option-by-option—share-by-share—cost aggregation for reduction of benefit
      • Rights Partly Paid
        • §1083  payment for shares, payment for right to shares—payment for right by employee only—death benefit, excess of value over amount paid for right
    • Stock Benefit Deduction
      • §1084  requirement for acquisition of shares after death—acquired by the estate, beneficiary, vested person—no acquisition required if employer makes election—former administrative policy
    • Loss For Estate
      • §1085  erosion of value after death—exercise by estate generates loss—carry-back of loss against benefit net of benefit deduction—adjusted cost base of shares equal to deemed benefit after carry-back—benefit reporting—net capital losses applied against benefit
    • Vested Persons
      • §1086  precedence for deemed disposition on death—inapplicability not extended to all other stock benefit provisions—no deeming of person as employee post-mortem
  • Benefit Deferral CCPC
    • Special Régime
      • §1087  benefit measured at acquisition of share—benefit included, taxation year of conversion or exchange—CCPC defined—stock benefit deduction, two-year holding period—deemed disposition at death
    • Qualifying Corporations
      • §1088  grantor, issuer, employer, grantee—employee dealing at arm's length immediately after agreement—CCPC not dealing at arm's length at time of agreement
    • CCPC Status Determination
      • Timing
        • §1089  CCPC at time of agreement—option conditional on going public—time of vesting not relevant for CCPC status
      • General Partner As CCPC
        • §1090  limited partnership, no stock benefit incentive—general partner as employer—eligible CCPC shares
      • Future Employee
        • §1091  issuance of rights for future employees—legally-binding agreement—shares held in trust—buy-sell
  • Foreign Exchange
    • Overview
      • §1092  currency fluctuation—amounts relevant to Canadian tax result—price and value, adjusted for currency—countervailing movements—relevance of currency for benefit inclusion, not benefit deduction
    • Option Price Translation
      • §1093  option award as transaction —conversion of price upon grant—stock benefit unlike capital gain—conversion of value and price at time of benefit
    • Meaning Of Exercise Date
      • §1094  amounts relevant to benefit—value upon acquisition—cashless exercise—acquisition before settlement date
    • Currency Gain Or Loss
      • §1095  price as conditional obligation—deferred taxation—price variations as gain or loss—benefit only tax result—variation in benefit over option term—option as capital property
    • Amount Payable For Shares
      • §1096  amount payable—payment by cheque—date of delivery—conversion on payment date—stipulating conditional cheque payment
    • Other Events
      • §1097  amount paid for option—value of consideration—currency gain or loss on payment
    • CCPC Share Dispositions
      • §1098  capital gain on sale—currency conversion, time of sale—cost base adjustment—paid-up capital—currency conversion, time of redemption
• 3. BENEFIT OUTSIDE S 7 §1099 - §1148
  • General Rule
    • §1099  stock benefit—remuneration—as benefit in kind—outside legally-binding agreement—stock option as right to shares—caselaw derived from British theories
  • Employment
    • Benefit Upon Grant
      • §1100  option exercisable for 10 years—vested upon grant—nontransferable—majority, perquisite upon grant—minority, upon exercise
      • Realization
        • §1101  pecuniary account—majority, realisation unnecessary—capable of realisation—minority, realisation only upon exercise
      • Nature Of Right
        • §1102  interest in property—personal right—majority, right to shares—minority, expectation of shares—assignable rights
      • Source Of Benefit
        • §1103  exploitation of right—extraneous to employment—no perquisite without exercise—multiple exercises
      • Valuation
        • §1104  measurability—if perquisite on grant, no perquisite if no value—if perquisite on exercise, value at grant not relevant
      • Conditions
        • §1105  assignability—no bar to turning into money before exercise—assignable right taxable on grant—vesting condition
      • Bonus Analogy
        • §1106  option as right to perquisite—right to bonus compared—bonus paid as options—expectation of payment
      • Discount Analogy
        • §1107  commodity discount—perquisite upon commodity purchase—variable market price under discount—constant price under option
    • Benefit As Share Offer
      • Robertson, FCTD
        • §1108  offer of third-party shares to employee—expectation of benefit—benefit taxable in year of exercise—exercise during employment as uncertainty
      • Robertson FCA
        • §1109  two benefits—benefit upon grant or exercise—quantification not feasible before exercise—value after vesting as investment
    • Third-party Option
      • Henley FCTD
        • §1110  warrants as commission—right to warrants vested—property interest—not offer of shares under warrant—taxable in year of allocation—liquidation as gain
      • Henley FCA
        • §1111  no valuation of benefit—property subject to condition—offer taxable upon exercise—assignable right as property benefit—warrant as property received
      • Share-dependent Right As Offer
        • §1112  sales commission analogy—shares in lieu of commission—timing of inclusion—time of receipt or constructive receipt—share-dependent offers
      • Directorate Policy
        • §1113  receipt of option—not offer of shares by employer—benefit equal to option FMV—conditions attached to option—gain on sale of shares
    • Post-employment
      • §1114  benefit deemed received after employment cessation—employment deemed continued
      • Limitations
        • §1115  employment, benefit charging provisions expressly covered by deeming employment continued—other provisions subsumed?
    • Post-employment Agreement
      • §1116  employment terminated when agreement made—benefit deemed received as if employment continues
    • Pre-employment Agreement
      • §1117  prospective employee—legally-binding agreement—when employer—statutory intent—director appointment—deemed remuneration
    • Open Market Share
      • Source Of Shares
        • §1118  meaning open market—directorate policy—meaning of sale—company law—intermediary selling shares—trust holding shares
      • Qualifying Shares
        • §1119  unissued—restored as unissued—treasury—third party—open market—trusteed arrangement—eligible share categories
      • Policy Considerations
        • §1120  out-of-pocket expenses—open market share—theoretical underpinning—share expenditure—financial standard—derivatives—deduction non-qualified securities—overlap—share provenance
      • Purchase By Employer
        • §1121  employer settling option—open market shares of issuer—sale by employer—expense not deductible—shares owned or loaned
      • Purchase By Issuer
        • §1122  shares acquired by issuer—treasury shares—reimbursement by employer—cost not deductible—out-of-pocket expenses
      • Purchase By Employee Benefit Plan
        • §1123  employee benefit plan, open market shares purchased by trust—trusteed agreement, provenance-blind?—mixed provenance, employee benefit plan
      • Purchase By Employee Share Purchase Plan
        • §1124  employer contributions—receipt by employee—contribution of open market shares—contribution of treasury shares—trusteed arrangements
      • Purchase By Employees Profit Sharing Plan
        • §1125  purchase and cancellation—shares reissued by plan—no deduction—open market purchase—qualified person
      • Purchase By Bonus Plan
        • §1126  purchase by employee—open market—broker as agent—employee benefit plan—cashless exercise
      • Hedging
        • §1127  treasury shares as hedge—deemed acquisition by employee—open market share settlement—withholding—total return swap—financial expense
  • Benefit Outside Employment
    • General Principles
      • §1128  exclusion of benefit not in respect of employment—other sources of income—"in respect of employment," widest meaning—exclusion and safe harbour mutually exclusive—damages
    • Director
      • Grohne FCTD, Only Remuneration Qua Director
        • §1129  obligation to purchase shares under standby agreement—benefit not in respect of employment of director
      • Services Performed Qua Director
        • §1130  director as employee—option granted in capacity of director as employee or something else—director as nominee—income of corporation
      • Scott FCA, Director, Employment
        • §1131  employee of corporation other than issuer—de facto employment with issuer, director—benefit in respect of employment
    • Startup
      • Del Grande, TCC
        • §1132  option exercise in connection with loan guarantee—no shareholder benefit upon exercise—shareholder benefit versus employee benefit—valuation of options
      • Taylor
        • §1133  director as promoter—benefit as employee—benefit as business income of corporate entity
      • Going Public
        • §1134  going public—benefit as employee or shareholder—little CRA guidance—comparing stakeholders
    • Shareholder Benefit
      • Identical Rights
        • §1135  nonidentical rights, different cost—not employment benefit—identical rights not exercised
      • Surplus Stripping
        • §1136  employee-shareholders in execution of tax avoidance scheme—benefit as shareholder not employee
      • Discretionary Awards
        • §1137  benefit as shareholder, if benefit only enures to shareholders—benefit as employee more specific provision, but not paramount—any connection to employment or primary connection?
      • Rights Offering
        • §1138  right to shares awarded by entity without share capital—employment benefit, unless shares reserved for existing members, not all employees
    • Consultants
      • Overlapping Status
        • §1139  benefit inclusion and deduction for employees—consultant or employee—part-time employee or director
      • Option Inclusion
        • §1140  option as amount received or receivable—amount received for undelivered services—unearned amount prior to vesting—amount receivable—offer of shares
      • Option Value
        • §1141  option value as business income—value at grant—intrinsic value—fair market value—valuation method—international consultant
      • Barter
        • §1142  value of services—business income—barter transactions—good and services tax—record of services
      • Capital Or Income
        • §1143  gain on exercise—no disposition if capital—gain or profit on share sale—adventure in the nature of trade—sale-back to client—option expiry
      • Right To Shares
        • §1144  share payment—amount receivable—conditionality—barter transaction—valuation—deferred share transfer
      • Service Corporation
        • §1145  options earned by consulting corporation—options transferred to employee—employee benefit measured as option value—issue of option by client to employee—benefit as share value—double tax
    • Extraneous To Employment
      • Phaneuf
        • §1146  grant of shares by employer corporation—benefit ordained by estate of controlling shareholder—only for employees but not in respect of employment—McNeeley
      • Busby
        • §1147  personal relationship, benefit not in respect of employment—director as employee?
      • Dundas
        • §1148  rights cancelled—not in respect of employment—breach of employment
• 4. BENEFIT FROM TRUST §1149 - §1201
  • Share Trusts
    • Classification
      • §1149  registered and unregistered—classification—EBP—SDA—EPSP—inter vivos trust—priority
    • Modern Interpretation
      • §1149.1  context and purpose—literal meaning—different characterization—conflict resolution—historical precedence
    • Rules Of Modern Conflict
      • §1149.2  object and context—trust rollout rules—conflict resolution rules—EBP SDA EPSP—precedence
    • Computed Outcomes
      • §1149.3  share bonus—7(2) trust—EBP—SDA—EPSP—results compared—policy consistency
    • Comparative Tax Treatment
      • §1149.4  table—holding arrangement—EBP—EPSP—SDA
    • Personal Trust Or Prescribed Trust
      • §1149.5  rollout exceptions—services as consideration payable—share holding trust—conflict between plans
    • Reversionary Trust
      • §1149.6  employment plans—trust distributions—transfers for value—loans
  • Purchase Arrangements
    • Trusteed Option Scheme
      • §1150  held by a trust—sale to employee—deemed agreement—priority—overlap
    • Arrangement
      • §1151  trustee arrangement—arrangement not necessarily a contract—open-ended meaning—particular qualifying corporation—different persons making arrangement—issuer, grantor or employer—person or qualifying person
    • Deemed Rights Under Arrangement
      • §1152  agreement with employer—legally-binding—time of agreement—discretion
    • Deemed Events
      • §1153  shares deemed acquired under agreement—amount deemed paid for shares—benefit computed net of amount paid or to be paid
    • Foreign Exchange
      • §1154  deemed agreement—deemed acquisition—Canadian currency at exercise—no currency adjustment for benefit deduction
    • Employer Discount
      • §1155  contributory trust—discounted shares arrangement—deduction of discount—holding or purchase arrangement—right to contribution amount—arrangement as EBP—employee savings plan
  • Holding Arrangements
    • Compensation Tool
      • §1156  conditional award—forfeiture deduction—timing—withholding—employer deduction—technical uncertainty
    • History
      • §1156.1  deferred compensation—employee benefit plan—salary deferral arrangement—CCPC shares—benefit deduction
    • Comparison
      • §1157  holding and purchase arrangements—differences—acquisition for employee—shares for sale to employee—priority
      • §1159  holding and purchase arrangements—outright ownership by trust—ownership by employee—custodian not trust—open market shares—shares acquired from third parties—legally-binding
    • Trust Vehicle
      • §1158  trust holding shares in trust or otherwise—deed of trust—requirements for beneficiaries—bare trust—agent—escrow—separate taxpayer
    • Time Of Acquisition And Value
      • §1160  share acquired when held by trust—CCPC share—benefit deduction—historical agreement—2-year hold
    • Trading Restriction
      • §1161  discount—trust as restriction—value for legal owner—value for trust beneficiary
    • Cost Base Of Shares
      • §1162  payment to trust—benefit added to cost of shares—personal trust—bump for trust or employee
    • When Shares Held
      • §1163  personal trust—capital gain—small business corporation—trust designation—trust rollout—timing determination—other property in trust
    • Trust Distribution
      • §1164  dispositon of interest—acquisition of shares—property rollout—designation of net capital gain—personal trust—deemed relationship
    • Benefit Timing
      • §1165  timing of benefit—early or late benefit—when share held by trust—deferral CCPC shares—distribution of shares—capital gain deduction—cost of shares—cost adjustment—purchase arrangement
    • Foreign Exchange On Distribution
      • §1166  shares in trust—currency fluctuation before distribution—distribution at cost amount—capital interest in trust—currency gain inherited
    • Forfeiture Deduction
      • Offset Of Inclusion
        • §1166.1  forfeit due to failure to vest—deemed disposition as time for relief—interest in share or in trust
      • Triggering Events
        • §1166.2  particular year for conditions being satisfied—deemed disposition of the shares by employee—return of shares by trust to issuer—failure of employee to meet vesting conditions—buy-back from trust at cost or less—forfeiture relief on exchange of deferred shares
      • Relief
        • §1166.3  benefit inclusion reversed—capital gain or dividend taxation precluded
      • Foreign Exchange
        • §1166.4  benefit computed in Canadian currency—amount repaid same as amount paid—currency adjusted amount
  • EBP
    • Primacy
      • §1167  EBP framework—primacy of holding and purchase arrangements—relationship EPSP, SDA, RCA—trust rules—allocation—Chrysler—Black
    • Held By Trustee In Trust
      • §1168  Chrysler plan—retirement plan allocation—equivalent to agreement—allocation as one method
    • Legally-binding
      • §1169  share held for employee—legally-binding agreement—final agreement—no agreement
    • Property Interest Of Beneficiary
      • §1170  designation, assignment, apportionment—property interest in share—equity interest in property
    • Beneficial Interest Types
      • §1171  fixed beneficial interest—contingent or conditional—legally-binding in equity or contract
    • Notional Interest
      • §1172  notional allocation—theoretical versus actual—equitable owner of share—fixed beneficial interest
    • Vested Interest
      • §1173  unvested share in trust—forfeiture—allocation notional until vesting—holding by fiduciary retirement trustee
    • Sale Of Shares
      • §1174  power to sell shares—right to acquire shares—distribution of proceeds—legal owner not employee
    • Share Allocation
      • §1175  US retirement plan—accrued benefit—allocation of amount—"employee share ownership plan"—statutory requirement
    • Tax Allocation
      • §1176  allocation under EPSP—allocation under EBP—notional allocation—allocation of tax result
    • Allocation Of Option
      • §1177  stock option—allocation—commitment—grant—shares held in trust—specific shares for specific employees
    • Trust Deed Template
      • §1178  shares held for employee—no allocation—assignment of beneficial interest—terminological difference—setting up trust
    • Trust Template With Allocation
      • §1179  allocation model—terminological diffference—reporting contingent benefit—reallocation by trust—discretion—legally-binding—CRA audit
    • Prior Arrangement
      • §1180  legally-binding—obligation before trust created—binding under prior contract—binding from unit allocation
    • When Shares Held In Trust
      • §1181  before allocation—hybrid arrangement—dual nature—disposition of EBP interest—portion of EBP as holding trust
    • Trust Amendment
      • §1182  incentive plan modifications—award alteration—Chrysler trust amendment—power of appointment
    • Unit Trust
      • §1183  "unit trust"—unit-divided trust—beneficial interest defined by unit—shares held in trust—equitable ownership of shares
    • Unit Trust Template
      • §1184  undivided interest—fractional—dividends—voting—reallocation—termination—sale of shares—capital gains—adjustment
    • Discretionary Trust
      • §1185  discretionary income beneficiary—discretion subject to unit interest—trust document undisclosed—actual distribution
    • McNeeley
      • §1186  founder reallocation trust—EBP or prescribed trust—technical construction—employee savings plan—prescribed trust—health and welfare trust—benefit from employment
    • Excluded Payments
      • §1187  multiple arrangements—excluded payments—hybrid—source of payment—exclusionary clause—open market—damages
    • Holding Trust As Market Maker
      • §1188  primacy of agreement—holding trust—beginning or end—allocation—sale by employee
    • Plain Trust
      • §1189  not purchase or holding arrangement—not EBP or SDA—discretionary share offer—award when equity acquired—trust distribution—employer deduction
    • Treasury Shares
      • §1190  treasury shares—not Employee Benefit Plan—arrangement governed by stock benefit agreement
    • Open Market Shares
      • §1191  trust buying shares on open market—share held for employee—binding agreement to issue or sell—share provenance—treasury shares as hedge
  • Other Plans
    • EPSP
      • Framework
        • §1192  contribution allocated as income—capital gains—dividends—unrealized gains—withholding and reporting—rollout of appreciated property
      • Conflict With Stock Benefit
        • §1193  treasury shares held by EPSP—allocation—object versus means—true EPSP—statutory interpretation
      • Deduction
        • §1194  treasury shares—primacy of stock benefit agreement—deferred profit sharing plan—no primacy
      • Venture Capital
        • §1196  manager compensation—EPSP—allocation—valuation—carried interest—option investment
      • Founder Reallocation
        • §1197  founder incorporation—EPSP share subscription—performance based profit allocation—asset mix—appreciation not taxable—cost amount of distributed shares
    • RRSP
      • Plan Contributions
        • §1198  employer contribution—employer treasury shares—employer deduction—shares deemed acquired by employee—applicability of safe harbour—RRSP benefits
  • Otherwise Trusts
    • Standard Structure
      • §1199  trust held shares—deemed acqusition—distribution—failure to vest—a path to avoid impediments
    • Gauntlet Of Problems
      • §1200  averaging—personal trust—reversionary trust—tax postponement—employee benefit plan
    • Structural Solution
      • §1201  agency—escrow agreement—reversionary clause—shares held otherwise—forfeiture deduction
• 5. OPTION TRANSFER §1203 - §1245
  • Preliminary
    • §1203  general rules—benefit of vested person treated as benefit of employee—no deferral for CCPC shares
  • Rights Becoming Vested
    • Property Rights
      • §1204  becoming vested in person—vesting as transfer of ownership—vesting for property rights, not fulfillment of employment conditions
    • Conditions Attached To Share-based Compensation
      • §1205  vesting condition—time for exercise of vested option—restricted shares—accelerated awards—shareholder agreement—vesting subject to forfeit—clawback
    • Vesting Indefeasibly
      • §1206  use in relation to trusts, gifts and estates—"with no strings attached" if indefeasible—otherwise no absolute right nor immediate enjoyment required—becoming vested not necessarily irrevocable—validity of transfer under plan—vesting where transfer null
    • Statutory Vesting
      • §1207  income tax meaning—fiduciary-like relationships—estates, trusts and gifts, bankruptcy law, pension legislation, insurance law——vested as a result of death—vested person under trusteed share plan—forfeit deduction where conditions for vesting not met
  • Vested In Person
    • Person As Partnership
      • §1208  partnership and joint venture—foreign entity—partnership or partner as person vested—attribution and partnership allocation—double liability
    • Employee, Partners And Partnerships
      • §1209  transaction between persons not dealing at arm's length—control of partnership—deemed control for a corporation—person related to members of a related group in control of partnership
    • Trust As Person
      • §1210  taxpayer and personal trust deemed not dealing at arm's length—vested in person as beneficial ownership under a trust—employee as beneficial owner—alter ego trust as vested person after transfer from employee—transfer from alter ego trust—circular transactions—bare trust
  • By One Or More Transactions
    • Meaning And Use
      • §1211  how person becomes vested in rights—wide use of "transaction" under Act—more specialized use of "one or more transactions"—extended statutory definition, GAAR—ordinary meaning—series of transactions—event
    • Transaction As "Opération"
      • §1212  transaction as opération—Dufresne, widest possible sense—etymology—transaction same in English and French current usage—drafters' persistence with opération
    • Transaction As Arrangement
      • §1213  arrangement less than binding contract—arrangement as series of transactions?—transaction not necessarily arrangement—designation under stock plan—bankruptcy assignment as event
    • Transaction By Effect Of Corporate Law
      • §1214  winding-up under statute as transaction—rights acquired under statute not always transaction—transaction as legal fiction—transaction within legal act—acquisition by operation of law
    • Transaction As Transfer On Death
      • §1215  transmission upon death as transaction?—transmission upon death as transaction "between" persons—other involuntary transfers—death as event, not transaction
    • Plan Reallocation Upon Death
      • §1216  reallocation of options following death under stock option plan—unvested rights at death—reallocation of rights as transaction?—look-through as new allocation
    • Transaction As Tax Fiction
      • §1217  imputation of income from trust not transaction—deemed disposition as transaction—application of 21-year rule to vested person
    • Transaction As Guarantee
      • §1218  amount expended by taxpayer to repay loan—transaction for account of non-arm's length person—enforcement of guarantee as event—rights becoming vested by event under loan guarantee
    • Transaction As Amalgamation
      • §1219  amalgamation under continuation model—no concomitant time of existence of predecessor and new corporation—no transaction between entities—transaction as "opération," same meaning for same words throughout legislation
  • Between Persons Not Dealing At Arm's Length
  • Death Of The Taxpayer
    • Deemed Benefit Of Vested Person
      • §1225  specific time benefit deemed received following death—territorial and employment source of benefit preserved—deemed disposition upon death supercedes liability of vested person
    • Deemed Employment Of Vested Person In Canada
      • §1226  exercise of option by non-resident vested person after death of employee—deemed benefit taxable in hands of vested person—no deemed residence—source of employment, where duties primarily performed—no apportionment
    • Corporation
      • §1227  corporation vested in rights—benefit as income from the duties of employment—Form 5013-SA—source withholding?
  • Safe Harbour
    • Transfer
      • §1228  transfer by employee to holding company—benefit on transfer not taxable—reversion
    • Capital Gain Liability
      • §1229  events resulting in gain—rights under agreement as capital property—no gain to extent of employment income—gain on same property as benefit
  • Transferee
    • Same Appreciation Taxed Again
      • §1230  transfers of rights between vested persons—capital gain, no safe harbour for transferee—no cost adjustment for transferee unless shares acquired—attribution after subsequent transfer
    • Exchange Of Rights
      • §1231  exchange of options—relief—inapplicable to vested person—capital gain for vested person on exchange
    • Shares Basis
      • §1232  benefit in respect of share, addition to adjusted cost base of share—share acquired by vested person, bump if not at not arm's length—bump if acquisition after death of employee
    • Option Cost
      • §1233  cost of share acquired pursuant to option—benefit addition—option cost unrecognized—agreement disqualified—actual cost recognized
    • Net Share Settlement
      • §1234  shares not acquired under agreement—no shares acquired, no adjusted cost base addition—no inclusion of property value in income, adjustment not permitted—cost under general principles
  • Holding Company Examples
    • Example #1: Gift Of Option Followed By Rollover Transfer To Holding Corporation, Exercise Of Option, And Sale Of Shares
      • §1235  safe harbour on transfer from employee—rollover required on subsequent transfer
    • Example #1: Gift Of Option Followed By Transfer To Holding Corporation, Exercise Of Option And Sale Of Shares
      • §1236  tax return, employee and transferee holding corporation—integration achieved on acquisition and sale of shares by transferee
    • Example #1A: Gift Of Option Followed By Transfer To Holding Corporation, Disposition Of Option For Net Value
      • §1237  tax return, employee and transferee holding corporation—no adjusted cost base addition—asymmetry if shares not acquired by transferee
    • Example #2: Cost Of Option Paid By Employee, Transfer Of Option To Holding Corporation, Exercise Of Option By Holding Corporation
      • §1238  no benefit on transfer to holding corporation
    • Example #2: Option Cost Paid By Employee, Transfer Of Option To Holding Corporation, Exercise Of Option By Holding Corporation
      • §1239  same outcome if benefit realized individually or by holding corporation—cash flows
    • Example #2A: Option Cost Paid By Holding Corporation, Transfer Of Option To Holding Corporation, Exercise Of Option By Holding Corporation
      • §1240  cost of option unrecognized, less favourable consolidated outcome—cash flows
    • Example #2B: No Option Cost, Transfer Of Option To Holding Corporation, Exercise Of Option By Holding Corporation
      • §1241  same outcome if benefit realized individually or by holding corporation
    • Example #3: Extracting Option Value Using A Holding Corporation
      • §1242  fair market value—intrinsic value—CCPC share deferral—assignability of rights—surplus stripping—loan by employer
      • §1243  transfer value—intrinsic or fair market value—no benefit for transferor—attribution of benefit on share acquisition—benefit deduction—loan funding—interest deductibility
      • §1244  corporate level tax—option premium extraction—safe income—net after personal tax—net consolidated tax—connected corporation
      • §1245  consolidated outcome—after-tax—before distribution—after distribution—outcome as percentage of share appreciation
• 6. OPTION CHANGE AND EXCHANGE §1246 - §1303
  • Option Changes
    • Introduction
      • §1246  agreement changes—compliant agreement—modification as disposition—benefits in kind—history
    • Statutory Dispositions
      • Definition
        • §1247  sale price—interest or right in share—similar security—right to receive amount—option expiry—amalgamation
      • Caselaw
        • §1248  disposition—alienation—"disposer"—emphyteutic lease—right extinguished—no change in substance
    • Security Alteration
      • IT-448
        • Dispositions
          • §1249  1980 guidelines—alteration securities—same or different property—no "hard and fast" rules—sufficient substance threshold—shareholder economic interest—statutory basis
        • Not Dispositions
          • §1250  result matters—no effect up corporate chain—restricted shares—time of acquisition—amendment allowed by terms
        • Form Versus Substance
          • §1251  legal form versus substance—new agreement in law or fact—private-law determination—civil law—economic approach—realization—monetary substance
      • Debt Obligation
        • ITTN-14
          • §1252  disposition of debt—1980 policy reversed—threshold—rescission—settlement or cancellation
        • General Electric
          • §1253  debt obligation—new or old obligation—rescission—inconsistencies—fundamental changes—options
        • Directorate Policy
          • §1254  uncertainty—as a matter of law—inconsistencies—substantial changes—sufficiently fundamental
        • Rulings And Interpretations
          • §1255  maturity date—automatic renewal—debt assumption—novation—IBOR to RFR—credit default swap
      • Option Agreement
        • Wiebe
          • §1256  stock plan policy—Wiebe—fundamental change—qua shareholder or employee—monetary significance
        • Revised Policy
          • §1257  fundamental change—creation new agreement—Amirault—amendment—variation, no rescission—change retroactive
    • CRA Positions
      • Overview
        • §1258  private-law determination—rescission for fundamental changes—private-law as one source of guidance—option components—monetary significance
      • Repricing
        • Method For Achieving
          • §1259  not fundamental change—corporate split-up or spin-off—amendment—new option—cancellation—documentary changes
        • Rulings
          • §1260  spin-off—division—disposition—exchange relief—substance—repricing relief
      • Appreciation Right
        • §1261  amendment—net option cash settlement—no disposition of rights—business significance
      • Extension Of Term
        • §1262  expiry—no rescission, cancellation, novated—no disposition—monetary significance
    • Problem Changes
      • The Agreement
        • §1263  not collective plan—option as separate agreement—multiple options in same agreement—documentary agreement—disposition of some rights—shareholder rights
      • Implicit Realization
        • §1264  realization—option consolidation—cash payment for rights—net settlement—"the" shares
      • Agreement Ceasing To Qualify
        • §1265  right to acquire shares—cash settlement—disposition—exchange relief—not exercisable—benefit in kind
      • New Party, More Shares
        • §1266  party substitution—disposition if fundamental change—rights identical—cancellation—private-law determination—share quantity
      • Agreement Contemplating Variation
        • §1267  sponsor plan modifications—change of control—alteration—adding conversion privilege—when not disposition—debt obligation policy—discretion as plan feature
      • "Disposition To"
        • Court Cases
          • §1268  surrender of rights—translative transfer or disposition—for the account of—literal interpretation—substance approach
        • Disposition Of Shares On Cancellation
          • §1269  "disposition to" on exchange of shares—amendment for "disposition to" on redemption—rollover on disposition to corporation of its shares
        • No Acquisition Of Option
          • §1270  property acquired on option cancellation—if not acquired, whether not disposed of "to"—agreement changes—acquisition by vested person—deeming provision missing
    • US Policy
      • IRC Comparison
        • §1271  modification, renewal, extension as grant of new option—modification as delivery of additional benefits—Canadian policy value-blind
    • Limited Guidance
      • §1272  fundamental change as disposition—avoiding a disposition—ensuring a disposition—option exchanges
  • Option Exchanges
    • Relief
      • Overview
        • §1273  option exchange—qualifying entities—continuity fictions—compliant agreement—safe harbour—history—no employment requirement
      • Qualifying Exchanges
        • §1274  right to shares—right to shares or cash—employer settled right—appreciation right—exchange between types of right—realization of rights
      • Qualifying Grantor And Grantee
        • §1275  rights under agreement—rights of grantor or corporation not dealing at arm's length—new rights not necessarily under compliant agreement
      • Designated Person
        • §1276  rights of designated person—original grantor or person not dealing at arm's length—rights of amalco—rights or person not dealing at arm's length with amalco
      • Amalgamation
        • §1277  disposition of rights upon amalgamation—rights not capital property—change of agency policy
      • Option As Capital Property
        • §1278  capital property if no benefit or no disposition—precedence of benefit provisions
    • Continuity
      • §1279  no disposition, same option, same grantor—deeming for benefit inclusion only, not benefit deduction—drafting circularity
    • Times For Arm's Length Determination
      • For The Agreement And The Deemed Benefit
        • §1280  stock benefit times—relationship at time of agreement—at time of transfer—time of relationship with non arm's length transferee—time of share acquisition
      • For The Exchange
        • §1281  grantor different from issuer, time of exchange—time of new agreement, nature of new agreement—grantor relationship "immediately after disposition"—amalco relationship "immediately after disposition"—issuer to grantor relationship
    • Particular Person
      • Share Acquisition
        • §1282  new grantor as anchor—relationship to old grantor—not necessarily employer or issuer—amalgamation—amalco subsidiary
        • Diagram
          • §1283  diagrams—same grantor—new grantor—merger with grantor—relationship pos-merger
      • Parent Grantor Substitution
        • §1284  parent as grantor—employee of subsidiary—sale of subsidiary—no relief—preliminary exchange—exchange for rights in new parent
      • Asset Acquisition
        • §1285  creation of grantor—sale of grantor shares—grantor not dealing at arm's length—exchange relief
      • Alternative Issuer
        • §1286  option for shares of one or other issuer—right under agreement?—equivalent to option exchange
      • Loss Of Control
        • §1287  control by grantor given up—control not acquired by designated person—dealing at arm's length, no relief
    • Option Continuation
      • CCPC Shares
        • §1288  conditions for CCPC option—grantor, issuer and employer as CCPC—employee dealing at arm's length—disqualifying exchange—option fictionally continued
      • Disqualified Agreement
        • §1289  agreement ceasing to qualify after exchange—same option continuation—same prior qualifying agreement—benefit deduction
      • Net Share Settlement
        • §1290  net share settlement—right to shares, not to value of settlement—exchange of original option for new option, net settlement share number—acquisition of "the" shares—benefit deduction, price under original agreement—deemed disposition by repricing
      • Stock Benefit Deduction
        • §1291  continuation of option, stock benefit deduction—CCPC status continued for stock benefit inclusion only—contrast with exchange of shares—no additional fiction necessary
    • Hiatus In Exercisability
      • Phantom Stock
        • §1292  staggered exchange of options—phantom stock not consideration—number of optioned shares unknown before demerger—cessation of exercisability
      • Automatic Exercise
        • §1293  old options not exercisable after merger—special resolution, settlement with shares of merged entity, not predecessor—regulatory delay—promise not consideration
    • Only Rights As Consideration
      • Mixed Consideration
        • §1294  boot or shares as consideration—structured as distinct transactions—rights for rights, rights for boot or shares—spinco rights excluded from exchange
      • Dividend Equivalents
        • §1295  dividend equivalent as consideration other than rights, cash—as rights to shares if payable in shares
      • Bonus
        • §1296  amount received as bonus, not consideration for rights—bonus percentage of strike price
    • Enrichment Test
      • No Excess
        • §1297  same net value of option before and after—no regard for cost of new shares—vesting conditions not considered—standard valuation—plural options for one, one for plural
      • Valuation
        • §1298  unissued shares—valuation method—price adjustment—special distribution—rounding—change not exchange—time of exchange
      • Foreign Currency
        • §1299  net value equivalence—currency adjusted values—price requirement—original value without adjustment
      • Not Part Of Exchange
        • §1300  reduction of in-the-money value—separate rights exchange—exchange with different corporations
      • Offset Excess Value
        • §1301  value discrepancy_time of agreement, time of exchange—remedil measures—adjust ratio—adjust amount payable—grant additional option rights
      • Corporate Division
        • §1302  exchanges upon split—option exchanges involving splitco—repricing amendment involving splitco—exchange or repricing amendment without splitco—enrichment test—benefit deduction
    • Cost Of New Rights
      • §1303  exchange overvalue—disposition of old option for new option—cost of new option—overvalue not recognized as cost of new option—exchange of appreciation right—safe harbour—double taxation
• 7. OPTION TERMINATION §1304 - §1348
  • Option Surrenders
    • Introduction
      • §1304  life of right under agreement—exercise, exchange, conversion, modification, rescission—taxable event as employment income—compensation for thwarted right as damages
    • Winding-up
      • Reynolds TRB
        • §1305  shares as compensation for options—deemed benefit on settlement
      • Reynolds FCTD
        • §1306  no disposition to third party—shares as compensation for options—share settlement as damages—shares not income
      • Reynolds FCA
        • §1307  shares as compensation for options—settlement before or after breach—post-breach settlement not under agreement
    • Amalgamation
      • Greiner FCTD
        • §1308  net option buyout—no breach—disposition of rights under agreement
      • Greiner FCA
        • §1309  amalgamation—net option buyout—breach of agreement as question of fact—disposition "to" includes surrender—discharge before settlement
    • Merger
      • Harvey TRB
        • §1310  compensation stipulated in merger agreement—damages due to breach—consideration for disposition?
      • Harvey FCTD
        • §1311  compensation stipulated in merger agreement—surrender of rights—no prior breach—disposition "to"
    • Termination
      • Mackay TCC
        • §1312  unvested options—payment allegedly for rights surrendered—employment benefit
    • Dundas Buccini Appeals
      • Overview
        • §1313  contradictory decisions, same events—taxable disposition of rights or damages—origin of statutory remedy
      • Dundas TCC
        • §1314  amalgamation—rights surrendered—payment for cancellation, benefit from employment—damages taxable
      • Dundas FCTD
        • §1315  amalgamation—rights surrendered by implicit agreement—disposition on surrender—no breach
      • Dundas FCA
        • §1316  amalgamation—tacit modification of agreement—when agreement is discharged—not damage settlement
      • Buccini TCC
        • §1317  amalgamation—rights survive amalgamation—cause of action continued after amalgamation—disposition under agreement, deemed benefit
      • Buccini FCA
        • §1318  repudiation terminates contract—compensation as damages—disposition by consent taxable, not otherwise
    • Takeover
      • Bernier TCC
        • §1319  relative nullity of agreement followed by takeover—options disposed of under null agreement—no stock benefit deduction, shares could not be issued
      • Bernier FCA
        • §1320  voluntary or involuntary surrender—no event within benefit provisions—failure of appellant to challenge assessment
    • Damages Or Income
      • Quo Vadis Dundas-Buccini?
        • §1321  cases classified—cause of action, damages—breach, compensation—special meaning of "disposition"?—inside or outside agreement
    • Pre-employment Rights
      • Schwartz TCC
        • §1322  aborted employment—unallocated rights to damages—settlement tax-free
      • Schwartz FCA
        • §1323  surrogatum—employment contract as source of damages—surrogatum where benefit otherwise escapes liability—investment opportunity as source of stock benefit
      • Schwartz SCC
        • §1324  settlement unallocable to salary or options—not retirement allowance, not taxable—not from unenumerated source—limits of surrogatum
    • Surrogatum
      • §1325  directorate policy—Tsiaprailis—obiter dicta—employment versus business income—capital or income—replacement of salary—damages as contract breach
  • Rights Ceasing To Be Exercisable
    • Scope
      • §1326  deemed benefit—amounts received—ceasing to be exercisable—no transfer or disposition—disposition to person dealing at arm's length—multiple receipts
    • Applicability To Damages?
      • Commentators
        • §1327  amendment—coincidence—remedy?—no evidence of purpose
      • Statutory Remedy
        • §1328  analogy to wrongful dismissal—payment on termination—retiring allowance—express inclusion of damages—cause of income—breach as source
      • Explanatory Notes
        • §1329  explanatory notes example—disposition or not?—formal cancellation as disposition—fundamental breach as disposition—root inconsistencies as question of fact
    • Cessation Event
      • Unvested Options
        • §1330  ceasing to be exercisable—payment upon merger—no disposition—option cessation whether vested or not—vesting and exercisability conflated
      • Option Expires
        • §1331  disposition when right expires—ceasing to be exercisable not expiry—expiry as reaching term—changing the term to bring about a statutory disposition
      • Condition Contemplating Cessation
        • §1332  agreement stipulating cessation event—otherwise exercisable upon cessation under agreement—unexcercisable for economic reasons—exercisable at a different time—bankruptcy as reason for cessation
      • Legal Continuation
        • §1333  merger—exchange of shares for option—plan terms—ceasing to be exercisable—in accordance or not—no disposition
      • Modifying Agreements
        • §1334  meaning customary for stock option—rights under combined agreements no longer exercisable—new option or shares as amounts received following cessation—retrospective amendment, right never exercisable
      • Conversion Or Exchange
        • §1335  option conversion contemplated in agreement, no disposition but cessation—new option as amount received—option exchange not contemplated, cessation and no disposition—new option deemed not acquired, no amount received?
      • Damages
        • §1336  option exchange—insufficient exchange value—damages—exchange relief—fiction of continuity of agreement—no cessation—surrogatum—no income replacement—breach as cause of action
    • Deemed Disposition
      • Amount Receipt
        • §1337  receipt triggers disposition—definition of amount—right to receive amount—cause of action not amount—consideration as amount received, not its value—safe harbour—salary deferral arrangement
      • Multiple Receipt Scheme
        • §1338  deemed disposition of rights upon receipt—taxpayer not employee—recapture of cost over multiple payments—foreign currency payment
      • Amounts Received As Consideration
        • §1339  series of receipts over time—disposition for each payment—cumulative cost of rights—meaning of value of consideration
      • Timing Of Disposition
        • §1340  deemed disposition at time of receipt, not cessation—eligibility for benefit deduction—prescribed share conditions evaluated at time of each disposition
      • Benefit Deduction
        • §1341  benefit deduction, unexercisable right—election to forego deduction of payment—no payment for disposition or transfer
      • Inadequate Consideration
        • §1342  deemed proceeds adjusted, not value of consideration—deemed disposition to person dealing at arm's length—no adjustment for inadequate consideration?
    • Conflict Of Provisions
      • Assignment To Trust
        • §1343  not disposition, possibly not transfer—cessation if rights unassignable—amount received on return of rights—cessation final—holding trust
      • Repricing
        • §1344  drawdown of appreciation—no disposition—cash under safe harbour—ceasing to be exercisable at given price?
      • Vested Person
        • §1345  taxpayer as employee—rights under agreement—transfer to vested person—amounts received by vested person—no attribution—damages
      • Death
        • §1346  deemed disposition immediately after death—right extinguished—cessation by reason of death—beneficiary not taxpayer
    • Contingent Amounts
      • Benefit Determination
        • §1347  merger or acquisition—benefit valuation—contingency accounted for—rights ceasing—additional payments—safe harbour
      • Plan Clause Amendment
        • §1348  contingent amount as consideration—commutation by plan authority—benefit overestimation—amending return
• 8. SHARE BENEFIT §1349 - §1391
  • Classification
    • §1349  awards classification—business case—employment standards—shares as bonus
  • Share Bonus
    • Source Of Tax
      • §1349.1  share bonus—benefit under agreement—benefit whatever—other sources
    • Under Agreement
      • Issuance
        • §1349.2  no monetary consideration—shares issued—shares re-issued—treasury shares
      • Sales And Gifts
        • §1349.3  shares sold—sold, later issued—open market—gift
      • Constructive Receipt
        • §1349.4  when share bonus paid—no agreement before bonus determined— binding agreement after amount determined
      • Forfeiture Deduction
        • §1349.5  risk associated with restricted shares—capital loss or business investment loss—Department of Finance, is employee an investor?—deduction for forfeited shares
    • Outside Agreement
      • Economic Benefit
        • §1349.6  benefit whatever—material acquisition—receipt—valuation—employment—net worth—question of fact
      • Exchanges And Dispositions
        • §1350  restricted share without agreement, benefit upon vesting—no benefit deduction—no nonrecognition for share exchanges—immigration and emigration
  • Share Acquisition
    • Overview
      • §1350.1  benefit triggers—legal acquisition—material acquisition—convergence
    • Preliminary
      • §1350.2  shareholder—share—corporation—hybrid—interest in trust
    • Private Law Ownership
      • §1350.3  ownership—tax interpretation—acquisition—civil or common law—plain meaning—contract—corporate law
    • Proprietary Right
      • §1350.4  droit de propriété—incidence of ownership—sale of shares—unpaid shares—balance due
    • Beneficial Ownership
      • Legal Versus Beneficial Ownership
        • §1351  tax precedents—beenficial ownership—incidents of tile—
      • Use Of Term In Act
        • §1351.3  beneficial references—trusts—general—security—foreign—treaty
      • Directorate Policy
        • §1352  gifts and principal residence
    • Corporate Law
      • Organic Source
        • §1351.1  beneficial ownership defined—agent, trust, custodian—oppression remedies—right to share
      • Mechanism
        • §1351.2  shareholder rights—issuance—segregation—board resolution—validity—ownership
    • Jurisprudence
      • §1352.1  private law—object and purpose—legal relationships—economic realities—context—specific meaning
  • Restricted Shares
    • Thin Shares
      • §1353  legal ownership—incidents—dismemberment—share grant—restrictions and conditions—title before incidents
    • Comparative Policy
      • §1354  terminology—company law—omnibus plans—comparative tax—US UK Canada
    • Administrative Policy
      • §1355  US restricted shares—all rights pass—delivery mechanism—forfeit—service conditions—option exercise—escrow
    • Valuation
      • §1355.1  trading restriction—discount—agency policy—conditional shares—identical property—misrepresentation—meaning
  • CCPC Share Dispositions
    • Common Meaning
      • §1356  inclusion of deferred amount, share disposition or exchange—share exchange, definition—when distinct from share disposition—cancellation as disposition—merger or combination
    • Corporate Law
      • §1357  exchange of shares—low paid-up capital exchanges—conversions—changes—corporate and tax definitions unaligned—exchange that is not disposition
    • Rollovers
      • §1358  deferred share as capital property—convertible share, exchange—transfers and reorganizations, disposition on exchange—stock dividend, not substituted property
    • Voting Rights
      • §1359  exchange voting shares for non-voting—exchange as disposition
    • De Facto Control
      • §1360  voting to non-voting, no change in voting control—modification not disposition—change not exchange?
    • Common For Common And Preferred
      • §1361  common for same common and preferred—exchange not disposition, deemed dividend—almost identical shares, when exchange if not disposition—when change neither disposition nor exchange
    • Convertible Shares
      • §1362  conversion, no disposition—convertibility as right under agreement—conversion as both exchange of converted share and acquisition of new share—old share as deferred share—relief for exchange of shares
    • Bankruptcy Or Insolvency
      • §1363  no deemed disposition under subdivision a—disposition upon cancellation—allowable business investment loss
    • Synthetic Dispositions
      • §1364  short sale, not disposition—introduction of synthetic dispositions—price guarantee as disposition
  • Selling Deferred Shares
    • Ordering Scheme
      • Overview
        • §1365  ordering of dispositions—first in first out—deferral shares last
      • Technical Wording
        • §1366  shorthand description of benefit deferral provision—election required for DPSP shares—shares acquired or held
      • Identical Properties
        • §1367  definition—same inherent qualities—escrow shares—unvested shares—units tracking same index—options
      • Averaging
        • §1368  averaging for identical properties—deferred shares not identical properties—default cost method
      • Scope Of Ordering Rules
        • §1369  capital gain, benefit deduction, deferred benefit—ordering for shares disposed—no ordering for deferred shares exchanged
      • Rules For Regular And Deferral Shares
        • §1370  first in first out—deferral shares before regular—deferral shares by time of agreement
      • Example, Regular And Deferral Shares
        • §1371  regular shares disposed of first, average cost—deferral shares disposed of last, benefit deferred
    • Identification
      • Technical Requirements
        • §1372  designation requirements—acquisition, disposition and designation—31-day window—security not designated twice—RSU partial sale
      • Two Or More Dispositions
        • §1373  designations in 31-day window—when evaluated—time of disposition, filing, window close—nonidentical on subsequent disposition
      • Designation Prior 2001
        • §1374  previous CRA concession for designation—designation for cost base adjustment, not for cost averaging
      • Example: Averaging Before And After 2001 Amendments
        • §1375  averaging of cost and cost adjustment—designation cost adjustment—designation without averaging
      • Example: Subsection 7(1.31) Designation On Subsection 7(1.5) Exchange
        • §1376  designation for exchanged shares—disposition deemed not to happen on exchange—disposition required for designation—identical properties
      • Designation By Estate
        • §1377  CRA concession for post-mortem election—qualifying agreement for representative?
      • Procedure For Filing
        • §1378  no prescribed form—filing with tax return
    • Segregation
      • Legitimacy
        • §1379  prior policy—statutory identification—policy change—acceptable planning
      • Transfer To Trust
        • §1380  cost averaging—personal trust transfer—attribution of benefit—adjusted cost base of shares—superficial loss
      • Transfer Of CCPC Shares
        • §1381  option held by trust—alter ego trust—reacquisition from trust—CCPC benefit deferral and deduction—safe harbour—trust rollout
      • Transfer To Spouse
        • §1382  high and low cost—attribution of benefit to employee—attribution of gain to transferor—capital gain splitting with spouse
  • Deferred Share Exchanges
    • Scope
      • §1383  CCPC shares, disposition or exchange—nonrecognition to maintain deferral—shares, only consideration—qualifying entities—same value test
    • Only For Shares
      • §1384  boot on exchange of deferred shares—fractional, separate lot, split consideration, option—reduction of capital not consideration
    • Continuation Of Deferred Share
      • §1385  no disposition or exchange—new shares deemed old shares—new issuer deemed old issuer—shares deemed issued under old agreement
    • Entities Issuing Share Consideration
      • §1386  qualifying issuers on exchange—non arm's length with original issuer—entity formed on amalgamation or merger—non arm's length with entity amalgamated or merged—CCPC continuity
    • Convertible Shares
      • §1387  convertible preferred shares—conversion into common shares excluded from exchange
    • Spinoff Transactions
      • §1388  spinoff exchanges—not dealing at arm's length requirement—qualifying issuer
    • Election Pursuant To 85(1)
      • §1389  rollover election for nonrecognition exchange—eligible rollover property—deferral shares as capital property
    • Adjusted Cost Case
      • §1390  deferral shares, adjusted cost base adjustment upon acquisition—capital reorganization, adjustment reflected
    • Foreign Exchange
      • §1391  exchange values—currency adjusted equivalence—capital gain or loss due to currency
• 9. BENEFIT DEDUCTION §1392 - §1459
  • Introduction
    • §1392  option as investment—benefit deduction, capital gain inclusion rate—deduction for CCPC shares—deduction for other shares—relationship, price and share restrictions—capping benefit deduction—non-qualified securities
  • Arm's Length Requirement
  • Price Requirement
    • Options And Exchanged Options
      • §1394  no deduction if price less than value—no price reduction for life of option—price reduction only upon exchange
    • Opening And Closing Price
      • §1395  closing price of original agreement—other agreements, closing price equal or greater than opening price—on exchange, net value requirement—when price variation not disposition
    • Plural Agreements
      • §1396  deduction for benefit in respect of single security—deeming of benefit in respect of plural securities—exchange in respect of plural rights—plural or singular agreements
      • §1397  a particular agreement or agreements—average amount payable over agreements—appropriate measure of employee benefit—averaging—agreement as one or more offers
      • §1398  exchanges under agreements—pooling of rights, multiple agreements—net value requirement outcome, multiple agreements—when relief denied, single agreement exchange—benefit deduction value requirement, price under each original agreement
      • §1399  benefit for individual security—retracing original agreement—agreements multiple or combined—original agreement for each security—agreement as a particular offer—amount payable for particular security
    • Dispositions And Times
      • §1400  series of exchanges—multiple times, agreement or disposition—qualifying exchanges, all or one or more—each of one or more
    • Vested Person
      • §1401  employee as claimant of benefit deduction—conditions met by vested person, not employee—deduction for employee as taxpayer—exchanges by vested person disregarded
    • Fair Market Value Grant
      • §1402  no consideration except agreement for rights—subsequent exchanges, fiction same option inoperative—rights under disqualified agreement—same option fiction not operative for benefit deduction
    • Amount Payable
      • §1403  amount payable—determinable, as amount determined at exercise—variable, as amount actually paid—net settlement price, price under agreement if the shares had been issued
    • Share Value And And Number Changes
      • §1404  stock split, etc.—new option share number restated—new option share value restated
    • Currency
      • §1405  foreign currency, time of benefit—time of agreement for amount payable—amount payable versus amount determined—amount paid for rights
      • §1406  price guarantee—price requirement for amount payable—price increase or decrease, adjusted—incorporated to benefit
  • Election By Employer To Forego Deduction
    • Policy
      • §1407  compliant agreement—deductibility—benefit deduction upon acquisition of security—election to forego employer deduction—symmetrical policies
    • Requirements
      • §1408  election in prescribed form—evidence of election provided to taxpayer and produced with income tax return—T4 as evidence
    • Grantor, Not Employer
      • §1409  election by grantor—T4 filed by employer or payor, not necessarily grantor
    • Scope Of Election
      • §1410  securities referenced in election—election formerly grant-by-grant—splitting up documentary agreements—election and benefit deduction, security-by-security—non-qualified securities
    • Effect Of Election
      • §1411  no deduction by employer and persons not at arm's length—election "on behalf," agency or consent—validity of election notwithstanding deduction?
    • Disposition Of Rights
      • §1412  payment inclusive of any settlement—disposition of rights upon acquisition of shares—election for net settlement—election for late graduated estate acquisition
    • Arm's Length Relationship
      • §1413  time for evaluating relationship with particular qualifying corporation—time of agreement, payment, election or deduction
    • Vested Person
      • §1414  disposition by vested person—benefit deemed received by employee—no payment to employee
    • Net Share Settlement
      • §1415  payment deductible—benefit deduction, no acquisition of shares—election to renounce employer deduction—election where no deduction—amount payable under agreement
    • No Deduction To Forego
      • §1416  renouncing nondeductible amounts—deduction for non-qualified securities—deduction under foreign legislation
  • Price Changes
    • Overview
      • §1417  formula—grant price not less than fair market value—no price reduction during life of options
    • Option Exchange And Share Split
      • Example #1: Series Of Exchanges
        • §1418  price change allowed upon exchange subject to net value requirement
      • Example #1: Initial Option
        • §1419  price reduction allowed for closing price equal or greater than grant fair market value
      • Example #1: First New Option
        • §1420  opening price equal to or greater than closing price—no price constraint on exchange outside net value requirement
      • Example #1: Final Option
        • §1421  opening price equal to or greater than closing price at time of deemed benefit
    • Underwater Option Exchange And Grant
      • Example #2: Pre- And Post-merger Exchanges
        • §1422  net value requirement—reduction in value allowed—
      • Example #2: Top-up Option And Termination Settleemnt
        • §1423  disposition of rights, termination—computation of benefit
      • Example #2: Eligibility For Benefit Deduction
        • §1424  benefit deduction denied for underwater option
      • Example #2: Same Price For Exchanged Options, Neither First Nor Last
        • §1425  closing amount payable equal to or greater than opening amount payable
      • Example #2: Same Price For Last Exchanged Option
        • §1426  closing amount not greater than opening amount on final option
      • Example #2: Price Under Original Agreement Before Repricing
        • §1427  opening price of original option less than fair market value plus cost of option—exchange cannot remedy offside original price—agreement variation
  • Repricing Amendments
    • Overview
      • §1428  governance—benefit deduction, minimum price—net value requirement for relief exchanges—neutral repricing policy
    • Repricing Methods
      • §1429  repricing by amendment, original price compliant—repricing by exchange, original price compliant—repricing by disposition or deemed disposition, new price compliant
      • Rules Summary
        • §1430  CCPC options—other options, price compliance rules
    • Price Reduction As Variation
      • §1431  price reduced at any time—original price once varied not reduced—one price under agreement
    • Price Reduction As Exchange
      • Basic Rules
        • §1432  amendment deemed exchange—new option for old option—benefit deduction not otherwise available before—benefit deduction available after
      • Cascading Assumptions
        • §1433  reduction in price for underwater option—deemed disposition upon repricing—disposition treated as option exchange—exchange net value test—benefit deduction price requirement for option acquired on exchange
      • Ineligible Deduction Without Deemed Exchange
        • §1434  assumed option exercise after price reduction—benefit deduction unavailable as remedy prerequisite—foreign currency price
      • Eligible Deduction With Deemed Exchange
        • §1435  amendment as exchange—net value test—benefit deduction available after exchange—technical anomaly—underwater shares—timing of benefit—capital contribution
      • Net Value Requirement For Nonrecognition Exchange
        • §1436  deemed option exchange—net value requirement—price requirement under benefit deduction
    • Disqualified Agreement
      • §1437  timing of repricing—repriced agreement not compliant—no deduction for benefit under disqualified agreement—repricing amendment ineligible
    • Divisible Agreement
      • §1438  plural rights under agreement—reduction of average price—benefit deduction assumed unavailable only for repriced securities
    • Repeated Repricing
      • §1439  regular exercise price reductions—no limit on number
    • Valuation
      • §1440  routine price reduction—distributions supposed to reduce value—net value requirement, fair market value according to established method
    • Corporate Division
      • §1441  new options from more than one corporation—options as consideration for exchange—options as grant—value test exclusive of new grant—benefit deduction
    • Example #1: Spinoff
      • Exchange Of Options
        • §1442  option for shares of one company exchanged for option for shares of more than one company—if disposition nonrecognition exchange—repricing amendment if no disposition—net value requirement
      • Allocation Of Options Between Companies
        • §1443  new option from two corporations—benefit deduction, fair market value requirement
      • Net Value Requirement
        • §1444  option exchanged for options in two companies—more shares issued to adjust spinoff value
    • Example #1A: Spinoff
      • Shifting Price Between Entities
        • §1445  net value requirement—enrichment test for exchange applicable on aggregate value—new option price for spinoff share retraced to old option
    • Example #1B: Spinoff
      • Option From One Entity
        • §1446  spinoff exchange—all consideration from one of the resulting entities
  • Gift Of Securities
    • Overview
      • §1447  additional benefit deduction—gift of listed security to registered charity—timing of donation
    • Brokered Gift
      • Overview
        • §1448  cashless exercise—direction to broker to sell security and pay proceeds to charity—benefit on acquisition of security—taxpayer as employee
      • Direction To Broker
        • §1449  broker appointed by issuer—content of direction—disposition of security, payment of proceeds
      • Dispose Of And Pay
        • §1450  broker actions, not taxpayer's—direction to act immediately—delays
      • Payment Of Proceeds
        • §1451  payment to charity by broker—gift of proceeds of short sale, not compliant—value discrepancy between exercise and actual sale
      • Donation
        • §1452  donation at law—time of gift deemed time of payment—no withholding if brokered gift
      • Prorating Benefit
        • §1453  prorated for actual payment—adjusted for actual proceeds
      • Benefit Discrepancy
        • §1454  security-by-security determination—actual values or average—discrepancy in benefit deduction computation
    • Prorating Benefit
      • Example, Broker Exercise And Disposition
        • §1455  funding purchase price and transaction fees
        • §1456  gift benefit deduction reduced by transaction fees
    • Designation
      • §1457  deemed order of disposition for identical properties—gifted securities identified as disposed of
      • CCPC Shares, Ordering
        • §1458  deferral shares disposed of last—election to identify gifted deferral shares—gift in year of acquisition or exchange
      • Example: Disposition By Gift Of Shares
        • §1459  election to identify shares gifted—identical properties—capital gain
• 10. NON-QUALIFIED SECURITY §1460 - §1506
  • Basic Rules
    • Introduction
      • §1460  benefit deduction limitation—US model—specified person—annual vesting limit—vesting year
    • Limitation
      • §1461  benefit deduction—source of deemed benefit—acquisition of security—disposition or deemed disposition of rights—exclusion of non-qualified security—limit for any benefit on exercise or death
    • Specified Person
      • §1462  vesting limit for large non-CCPCs—definition of threshold—consolidated group revenue—gross revenue—policy preference
    • Benefit Inclusion And Deduction
      • §1463  no unique time for determinations—US statutory options, time of grant—benefit, year of acquisition—benefit deduction, end of taxation year
  • Timing
    • Vesting Limit Conditions
      • §1464  timing rules—time for deeming the securities non-qualified, when benefit deemed received—time for considering securities under agreement, time of grant or time of exercise—exclusions for other agreements with same vesting year—vesting acceleration
    • Foreign Exchange
      • §1465  fair market value—date of agreement—no currency conversion after date—benefit deduction
    • Compliant Agreement
      • §1466  agreement, meaning—vesting limit for compliant agreements—deduction room for compliant agreements—compliant but no benefit deduction—designation—pre-employment agreement
    • Employment
      • §1467  relevant time of agreement—leaving an employment—becoming specified person—agreement before employment—employment transfer
    • CCPC Change In Status
      • §1468  CCPC benefit deduction—general benefit deduction—vesting limit erosion—designation—notification—employer deduction
    • Transitional Rules
      • §1469  enactment—grandfathered exchanges—exchanges as new grant—reduction of deduction room—avoiding disposition
  • Formula
    • Overview
      • §1470  annual vesting limit—elements of formula—formula text—formula inapplicable if designation
    • Stated As Allocation Method
      • §1471  agreements ranked by date—earlier agreement allocated deduction room—later agreement gets remaining room—ineligible securities—designation
    • Formula Elements
      • §1472  programmable formula—legislative technique—elements in table form—elements explained—example
    • Deduction Room
      • §1473  securities excluded—prior agreements—securities to be issued—timing of determination—wasted deduction room
    • Example: One Agreement
      • §1474  one option with different vesting years—deduction room allocated per vesting year—securities under same option with different vesting years—each tranche allocated deduction room
    • Example: Multiple Agreements
      • §1475  more than one option vesting in the same year—allocation of deduction room to earlier grant—deduction room for all grants no greater than limit for the vesting year
    • Example: Exclusions Before That Time
      • §1476  cancellation or expiry before new option grant—deduction room used by earlier grant reduced for cancelled or expired securities—securities under agreement as determined at grant
  • Designation
    • Procedure
      • §1477  designated as non-qualified or apportioned under formula—designation by grantor—why designate?—no method enacted—designation compared to notification
    • Example: Underdesignation
      • §1478  designation insufficient—formula allocation—designated securities excluded from later awards—changing designation
    • Example: Volatility Differentials
      • §1479  same agreement, different rights—rights having greater value—no designation of identical properties with different rights—separate agreement for valuable rights
  • Vesting Year
    • Year Specified, Calendar Or Referable To Calendar
      • §1480  vesting year—two determination methods—calendar year method—date translatable into calendar year
    • Acceleration
      • §1481  specified calendar year—accelerating condition—60-method method if no year specified
    • Transfers
      • §1482  specified calendar year for taxpayer—right exercisable by taxpayer, not transferee—60-month method for transferee
    • Conditionally Specified
      • §1483  first becoming exercisable—conditionally exercisable in calendar year—conditions not deemed satisfied—unlikely conditions, when exercisable—IRC assumption implicit?
    • Foreseeability
      • §1484  reasonably foreseeable event—eventuality without specific time—reasonable probability in particular year—determined at grant
    • Event Foreseeable
      • §1485  acceleration of vesting—event year supplanting specified year—event failing to happen—performance target as foreseeable event—year specified as no sooner than—no calendar year stipulated
    • 60-month Vesting Fiction
      • §1486  no specified calendar year—vesting assumed over 60-months from grant—pro rata vesting over days—no last day determinable at grant, unknown—overlap of 60-months with specified year under same option
      • Identical Rights
        • §1487  benefit deduction, security by security—plural frame for 60-month method—same beginning and end, same vesting year —ordering acquisition for a security
    • Transfer To Vested Person
      • §1488  vesting limit applicable to benefit attributed to employee—assumptions required for vesting year and agreement—securities acquired by vested person deemed non-qualified—no ordering by vested person—benefit deduction after death of employee—limit inapplicable to vested person
  • Vesting Year Modification
    • Time For Determining
      • §1489  time for determining vesting year—only time of reasonably foreseeable event indicated—no express time for vesting year determination—IRC express rule not adopted—time coincident with application of formula to agreement—unknowable expiry date
    • Changing Vesting Year
      • §1490  vesting year evaluated at indeterminate time—IRC time, inception of agreement—change in vesting year, not normally disposition—retrospective effect of varying agreement
    • Example: Vesting Year, Planning
      • §1491  example—underwater options—spreading vesting over more calendar years—effect of change on deduction room
    • Example: Exchanges
      • §1492  option exchanges resetting vesting year—option as new agreement—new option, later vesting year—disposition required for exchange—price requirement, benefit deduction—shifting deduction room—designation instead of exchange
    • Net Option Exchange
      • §1493  exchange of options—shifting appreciated value to new options—new agreement with benefit equal to deduction room—grant of new options to balance investment opportunity
  • Deemed Order Of Acquisition
    • Overview
      • §1494  ordering at time of acquisition—order for particular option—non-qualified securities acquired last
    • Example: Two Agreements
      • §1495  acquisition under option—eligible securities determined for particular option—non-qualified securities acquired after eligible securities
    • Example: Two Methods, Unvested Tranche
      • §1496  order of acquisition for vested securities—unvested securities could not be acquired—unvested acquired after vested securities
    • Designating Agreement Date
      • §1497  simultaneous agreements—formula mismatch—agreement as distinct offer—separating offers into distinct agreements—designating distinct offers
      • Example: Splitting Up Agreements
        • §1498  distinct offers in same agreement—loss of deduction room if simultaneous—designation of order for offers as separate agreements—dividing agreement into offers
  • Employer Deduction
    • Overview
      • §1499  deductibility of stock compensation—expense representing deemed benefit—corporate deduction for non-qualified securities
    • Employee Benefit
      • §1500  benefit under agreement deductible by taxpayer—employee at time of agreement—benefit in respect of employment with taxpayer
    • Crossborder Employee
      • §1501  benefit for non-resident—OECD apportionment of benefit—deduction limited to Canadian liabiltiy
    • Qualifying Person
      • §1502  qualifying person as deduction claimant—partnerships and most trusts not included—qualifying person as corporate partner—foreign branch
    • Deduction, Taxable Income
      • §1503  corporate deduction dependent on deductibility for employee—deduction from taxable income—benefit deduction to extent of taxable income—cash settlement—no deduction from income if securities eligible
    • Transferable Option
      • §1504  benefit upon death—deduction from taxable income, heirs—no deduction for vested person after death
    • Notification
      • §1505  notification—employee, 30 days from agreement—minister, filing due-date—if notification erroneous
  • Calculator
    • Computation Formula—enter Details Of Options—calculate Proportion Of Non-qualified Securities
      • §1506  
• 11. PRESCRIBED SHARE §1507 - §1559
  • Preamble
    • §1507  prescribed share, assuming risk associated with share—"plain vanilla share"—no requirement for CCPC benefit deduction—unit of mutual fund trust excluded
  • Definition
    • When Determined
      • Sale Or Issue
        • §1508  time of actual sale or issue—time of fictional sale or issue rights disposed of—trusteed arrangements
      • Assumed Issuance
        • §1509  fiction of share issue at time of disposition of rights—if share not legally issuable, how time determined—likelyness of share issue, equity ownership—if share could be issued
    • No Dividend Floor Or Cap
      • Overview
        • §1510  maximum or minimum—piggy-back dividend exception
      • Covenant In Loan Agreement
        • §1511  maximum or minimum in any agreement—source of limitation, company law, contract, practical constraints—adjusting purchase price—dividend subject to purchaser's consent
      • Cumulative
        • §1512  minimum cumulative preferential dividend—unpaid dividend on liquidation
    • No Liquidation Floor Or Cap
      • §1513  maximum or minimum—piggy-back liquidation exception
    • No Conversion
      • §1514  no convertibility into security—exception for conversion into prescribed share—time for conversion if share issued—time for conversion if rights surrendered
    • No Buyout At Behest Of Holder
      • §1515  ability to cause redemption, acquisition or cancellation—for determining right, time right exercisable—subsequent holder—estate
    • No Paid-up Capital Reduction
      • §1516  paid-up capital reduction by any person or partnership—obligation of entity, not right—averaging down—reduction outside acquisition—reasonable expectation—safe harbour—2-year limitation
    • No Buyout At Behest Of Corporation
      • Overview
        • §1517  redemption, acquisition or cancellation by corporation—exception for price equal to fair market value or less—overlap between definition items
      • Approximate Value
        • §1518  approximation, conceptual or numerical—actual result under formula—price adjustment required if formula result unobservant—aprpoximate as slight variation
    • No Reasonable Expectation Of Buyout
      • Overview
        • §1519  redemption, acquisition, cancellation, conversion—reasonably anticipated within two years—discretionary cashout—reasonable expectation for buyer or shareholder
      • Amalgamation, Winding-up, Distribution
        • §1520  reasonable expectation, exception—specific reorganization events—distribution without dividend
      • Conversion And Reorganization Of Capital
        • §1521  reasonable expectation, exception—only prescribed share consideration—allocation of other consideration in rollover
    • No Reasonable Expectation Of Amendment
      • §1522  changes reasonably expected to be made within two years—unexpected changes—changes expected but not expected to be made within two years—reasonably expected disqualification, within two years of amendment
    • CCPC Exchanges
      • §1523  exchange of prescribed share, reasonable expectation—exchange of CCPC share deemed not to happen—fiction relevant to reasonable expectation?
  • Acquisitions
    • Safe Harbour
      • Overview
        • §1524  disqualifying right or obligation—evaluating requirements without reference—qualifying purposes—arm's length
      • Loss Protection Purpose
        • §1525  loss protection, adjusted cost base as minimum—adjusted cost base inclusive of bump—guarantee in excess of holder's actual cost—foreign currency
      • Provide With Market
        • §1526  market-making, fair market value as maximum—market-making, concurrent or dual purposes—co-equal principal purposes
      • Profit Conditions
        • §1527  payout not determined by apportioned period profits—loss protection and market-making payouts—profits as part of value formula
      • Reasonable Expectation Of Buyout
        • §1528  reasonable expectation as additional requirement—applicable to compliant or safe-harboured right or obligation—safe harbour for reasonable expectation
    • Montminy
      • Facts
        • §1529  amendment of option—option exercised in anticipation of asset purchase—sale of shares to holding—benefit deduction on exercise—prescribed share determination
      • Agreement
        • §1530  right to sell share non-compliant but safe-harboured
      • Disagreement Between Courts
        • §1531  reasonable expectation disqualification, rejected on appeal
      • Appellate Reasons
        • §1532  no disqualification if right safe-harboured
    • Policy Inconsistencies
      • Listed And Unlisted Shares, Options
        • §1533  reasonable expectation, market-making safe harbour—listed shares, market access—unlisted shares, market buyback—option puts—CCPC shares, 2-year ownership—inconsistencies for open market shares and option cashouts
      • Event Just Happens
        • §1534  reasonable expectation mitigated by safe harbour—without right to acquire no safe harbour—reasonable expectation arising as a result of right—reasonable expectation irrespective of any right
      • Excepted Expectation
        • §1535  exception applicable irrespective of safe harbour—exceptions involving right or obligation—exception overriding disqualification for right or obligation?
    • Options Surrendered
      • §1536  fiction share issued when disposed of—option shares excluded from acquisition agreement—option surrendered, no share issued— no right to acquire shares, no reasonable expectation
    • Takeover
      • §1537  option exercised in anticipation of takeover—no put or call—disqualification for reasonable expectation—no safe harbour unless right or obligation
    • Going Private
      • §1538  option exercised on minority buyout—reasonable expectation, share disqualified—no safe harbour if no right or obligation—purpose of buyout right not necessarily market-making
    • Imminence Of Takeover, Subsequent Buyout
      • §1539  no CRA guidance for reasonable expectation—reasonable expectation, no safe harbour right before takeover—safe harbour right after acquisition—exchange of rights as alternative to surrender
    • Specified Person
      • Overview
        • §1540  put to the specified person—call by the specified person, onside if fair market value—put, call or paid-up capital reduction by specified person, reasonable expectation
      • Definition
        • §1541  not dealing at arm's length with issuer—member of partnership—beneficiary of trust—timing
      • All Or Substantially All
        • §1542  ninety percent thresshold—court discretion—administrative starting point
      • Types Of Acquisition
        • §1543  offer for less than substantially all of the shares—gradual acquisition—ownership threshold for all shares—not necessarily acquisition of control—proposals to lower threshold
      • Court-approved Transactions
        • §1544  acquisition not by way of offer—when acquisition by way of arrangement
      • Arrangement
        • §1545  arrangement accepted as offer—acquisition of all of shares of target
      • Triangular Amalgamation
        • §1546  not offer for shares, where shares disappear—not dealing at arm's length as a matter of fact
      • Arm's Length
        • §1547  not at arm's lenght—existing business relationships—parties bound to transaction
  • Swaps
    • Overview
      • §1548  shares used to pay option price—swap not compliant if right, obligation or reasonable expectation—purpose of swap, not to make market
    • Swap Attestation Procedure
      • §1549  attestation of share ownership—no share given up—net share, net of tax settlement
      • Rulings
        • §1550  attestation not disposition—net share settlement—adjusted cost base bump
      • Example
        • §1551  swap method, compared to payment of share price—ownership position compared—tax cost compared
    • Reload Option
      • §1552  options awarded following swap attestation—separate benefit—price of shares or price of shares and reload options—eligibility for benefit deduction—amended original agreement
    • Non-compliant US Plan
      • §1553  offside provisions for Canadian employees—swap shares owned for two years—board discretion to prevent offside exercise—board undertakings
  • Share Agreements
    • Shareholder Agreement
      • §1554  buy-sell agreement, right to sell, obligation to acquire—post-issue agreements—agreements 2 years after issue
    • Buy-sell Agreement
      • Right Of First Refusal
        • §1555  no ability to cause acquisition—right to acquire shares when clause triggered—price not capped at fair market value
      • Piggy-back
        • §1556  right to cause share to be sold to offeror—when triggered—fair market value, safe harbour—no capped amount—actual amount payable
      • Drag-along
        • §1557  obligation to sell to offeror—no disqualification before offer—safe harbour for market-making with price cap
    • Withholding Tax
      • §1558  redemption to pay withholding tax—net settlement—cashless exercise—penalty redemption
    • Flow-through Share
      • §1559  expense renunciation—disqualification on paid-up capital reduction
• 12. SDA §1560 - §1612
  • General
    • §1560  receipt of remuneration—employment and pension—cash basis—timing elements—material possession—constructive receipt
  • Constructive Receipt
    • Receipt Remuneration
      • §1561  expanded receipt—between family members—salary—tax debts—source deductions—arrears—fund contributions
    • Fund Contribution
      • §1562  economic benefit—trust—retiring allowance—deferred compensation—contingency clause—beneficially owned
    • Benefit Exclusion
      • §1563  excluded benefit—former Act—benefit from contribution—receipt principle—appropriate subdivision
    • US Policy
      • §1564  US policy—comparison—quality of income—elections before earned
    • CRA Policy
      • §1565  core policy—consistency—Bonus—SAR—EBP—DSU—retirement—flexible benefits
  • Salary Deferral Arrangement
    • Overview
      • §1566  specific provisions altering time of receipt—salary deferral arrangement, amounts earned that were deferred for tax purpose—constructive receipt, amounts at disposal of employee—concurrent application
    • Statutory Scheme
      • §1567  inclusion of deferred amount—inclusion of amount received—employer deduction—employee forfeit—hybrid plans
    • Policy
      • §1568  right to amount—evidence of receipt—determined amount—accrual amount—earned or otherwise received—multiyear award distinguished—no judicial guidance
    • Deferred Amount
      • §1569  right under arrangement—right to deferred amount—actual or notional arrangement—hybrid plan—forfeit of right, employer as person with subsisting right—interest accrual—trust arrangement
    • Right To Receive
      • §1570  any right in the year—right to amount—legally-binding—undetermined amount—no salary deferral
    • Contingent Beneficiary
      • §1571  contingent right—amount as right to income—annual applicability—discretionary trust—forfeit risk—GAAR
    • Postponement Purpose
      • §1572  main purposes—several main purposes—purpose of taxpayer or employer—purpose of individual employee—salary or wages—tax payable
    • Substantial Risk
      • §1573  conditions subject to substantial risk—significant duty or limitation required—future compensation—no amount deferred unless earned—no judicial or administrative guidance
    • Conditions Without Substantial Risk
      • §1574  condition disregarded unless substantial risk—explanatory notes—employment condition—Treasury regulation—
    • Accumulating Metrics
      • §1575  incentives for long-term goals—defining the earning period—conditions for the awards of earnings—deferral period earnings—uncertainty
    • Excluded Arrangements
      • §1576  pension plans, profit sharing plans, employee trusts, etc.—bonus plans and end of employment plans—deferred salary leave plans
  • Section 7 Rights
    • Overview
      • §1577  share-dependent award—statutory—judicial extension—right to share settlement—promise to pay amount—policy substance
    • Safe Harbour For Deferred Compensation
      • §1578  complete code for stock benefits—stock benefit safe harbour—comparative object of stock benefit and SDA provisions—option grant as instituting SDA—technical compatibility
    • Bonus Shares
      • §1579  share or cash bonus at employer's discretion, no agreement—application of SDA provisions to bonus—if share settlement agreed, SDA inapplicable—deduction of employee forfeit—recapture of employer deduction—SDA applicable to disqualified agreement
  • Appreciation Rights
    • Properties
      • §1580  initial value—entitlement—consideration—settlement—maturity—type of incentive—as SDA exception, RSU and DSU—benefit in kind—reporting standard
    • Value At Outset
      • §1581  promise to pay—no constructive receipt—appreciation right as promise—right with or without initial value—starting value as evidence of deferral—earned value as deferral
    • Future Services Assumption
      • §1582  phantom shares—future services, not deferred salary—salary deferred if right exercisable
    • Accrual Basis For Plans
      • §1583  appreciation plans—starting value as deferred amount—annual increase as deferred amount—tax postponement as annual test—limited exception ATR-45
    • ATR-45 Plan
      • §1584  nil starting value—conditions for exception—basis for exception modified—share manipulation—deprecation of previous statements
    • PARs
      • §1585  performance appreciation rights—appreciation computed by reference to earnings—metric tied to business unit—partnerships—no rulings for formula plans
    • Initial Value Misleading
      • §1586  starting value as measure of deferral—present value of appreciation right—correct measure of deferral—cash basis
    • Accrual As Deferred Amount
      • §1587  right or entitlement—right to salary postponed by employee—inclusion of accruals—interest versus appreciation—value increase—value decrease—forfeited amount
    • Deferred Amount For Trust
      • §1588  trusteed plan—no inclusion of accrual—no inclusion of variation in value—deferred amount definition—funded versus unfunded plan
    • Deferred Payment
      • §1589  option to defer payout—question of fact whether deferral beyond first maturity results in SDA—no SDA before right to settlement—extension of term
    • Right Upon Vesting, Not Upon Grant
      • §1590  award based on cumulative earnings—no right to an amount before vesting—no main tax purpose if based on future earnings after vesting—multiyear award
    • Initial Value, Award Conditions
      • §1591  payout as multiplication of initial award—payout based on stock performance metric, not SDA—starting value as deferral indicator
    • Exchange For Other Rights
      • §1592  nil starting value appreciation right—on change of control election to receive units under SDA exception plan—no inclusion of income on conversion—new promise to pay with different right not payment—gain on old promise as different property—appreciation right as entitlement
  • Share-based Dividend Equivalents
    • Overview
      • §1593  dividends on notional shares—settlement as cash or unit entitlement—SAR, DSU and RSU
    • Rulings Policy
      • §1594  credit of dividend equivalent units, no income inclusion—no disqualification of otherwise compliant arrangement—blanket and more limited rulings
    • Severability Of Features
      • §1595  dividend as separate right—as its own arrangement?—as component of investment return promise—dividend-equivalent units comprised in original deferral
    • RSUs
      • §1596  deferred bonus plan—dividend equivalent not additional bonus—early payout of dividend equivalent, no postponement of tax for RSU?—appreciation plan, future or current services
    • DSUs
      • §1597  end of employment plan—dividend-equivalents, offside DSU conditions?—dividend-equivalents as total return promise—accelerated cash payment of dividend-equivalents disqualifies plan
    • Appreciation Rights
      • §1598  forward appreciation unit—dividend equivalent on units settled in cash before maturity—future compensation or deferred compensation?—not separate hybrid arrangement
    • Section 7 Agreements
      • §1599  restricted share unit settled by issuing shares—dividend-equivalent on units settled in cash—safe harbour inapplicable without right to receive shares in satisfaction of dividend-equivalent units—dividend-equivalent attached to option
  • Supplementary Pension
    • SDA And RCA Compared
      • Two Amounts
        • §1600  RCA funded, SDA funded or unfunded—SDA overrides RCA—two amounts referenced in SDA definition—first amount, retirement benefit, second amount current compensation
      • Overlapping Intent
        • §1601  SDA exception for end-of-employment, same time frame as RCA retirement—funding of end-of-employment plan, characterization as RCA
      • Compensation Paid After Retirement
        • §1602  RCA treated as SDA—current salary or bonus traded for retirement benefit
      • Not Salary Or Wages
        • §1603  SDA deferral, definition of salary or wages exclusive of pension—postponement of compensation for retirement income—SDA not RCA
    • Deprecation Of RCA To SDA
      • Reasonableness
        • §1604  RCA treated as SDA if benefit not reasonable—comparison to RPP, contribution rate—electing a compensation mix—technical requirement of salary deferral
      • Anti-avoidance
        • §1605  policy as unproven presumption—RCA tax avoidance schemes, treated as SDA—special tax
    • Settlement
      • §1606  in lieu of pension payments reported as employment income—settlement recognized as pension
  • Other Deferrals
    • Retiring Allowance With SDA
      • Intersection
        • §1607  retiring allowance, defined—salary or wages postponed for retiring allowance
    • Retiring Allowance
      • Instalments
        • §1608  SDA where salary or wages traded for retiring allowance—retiring allowance paid by instalment—constructive receipt—funded through trust, RCA
    • Employee Benefit Plan
      • SDA Excluded From EBP
        • §1609  not EBP if SDA—EBP benefit deferred until paid
      • Investment Plan
        • §1610  trust contributions by employer and employee, employee benefit plan—employer contributions taxable when paid out, appreciated value—deferral of payment out of EBP, constructive receipt
      • Funded Bonus
        • §1611  funded share bonus plan, SDA exception plan—EBP, neither SDA nor RCA
    • Leave And Overtime
      • §1612  deferred vacation leave—accumulated overtime——overtime not bonus—unused sick leave credit
• 13. DSU §1613 - §1635
  • Exception SDA
    • §1613  end of employment plan conditions—employment—beneficiary—contract parties—maturity—share dependence—at risk
  • DSU Typical Plans
    • Officer Bonus Plan
      • §1614  senior executive bonus plan—optional credit of annual bonus to units, up to 100%—units based on listed shares—settlement at end of employment—lump-sum cash only
    • Minimum Equity Requirement Executive Plan
      • §1615  senior and middle executive—optional credit of salary and annual bonus to units, up to 100%—unit value based on listed shares—no credit after maximum requirement met—settlement at end of employment—cash or shares, treasury or open market, employer discretion
    • Canadian Supplement To International Plan
      • §1616  Canadian directors and officers of Canadian subsidiaries—optional credit—officer, up to x% of salary and y% of incentive award—director, up to x% of both retainer and meeting fees—unit value based on listed shares of non-Canadian parent—settlement at end of employment—no cash settlement—treasury or open market shares, employer discretion—share settlement net of tax
    • Directors And Officers
      • §1617  Canadian and non-Canadian directors and senior officers—officer, units instead of entitlement to shares—director, up to 100% of annual retainer—unit value based on listed shares of Canadian corporation—settlement at end of employment—participant can choose settlement, open market shares or cash—corporation can override choice by issuing treasury shares—settlements net of tax except treasury shares
  • DSU Director Plans
    • Policy
      • §1618  director equity ownership—director as employee—fairness, employment or appointment?—no distinction between director and executive plans in ruling policy
    • Directors Plan, Units Or Shares
      • §1619  directors—optional credit of up to 100% of retainer and attendance fees to units, quarterly—unit value based on listed shares—settlement at end of employment, term as director—cash or shares, treasury or open market, employer discretion—share settlement net of tax
    • Directors Only, Deferred Units Instead Of Shares
      • §1620  directors excluding officers—election, up to 100% of retainer and attendance fees for units, annual election for each appointment term—remainder of remuneration paid as shares—unit value based on listed shares—settlement at end of employment, term as director—net share settlement
  • Initiating Arrangement
    • Election Before Earned
      • §1621  allocation to exception plan—election required prior to earning amount—expanded constructive receipt policy
    • Preceding Taxation Year Elections
      • §1622  election in year preceding—election in first employment year, bonus for year commencing after election—election before bonus payment date—constructive receipt
    • Deferred Plan Election
      • §1623  policy clarification—election before amount constructively received, core policy restated—election required before amount available for payment—late bonus declaration, tax postponement
  • Investment Tracking
    • Derivatively Dependent Shares
      • §1624  plan benefits dependent on employer share value—shares of any class—share value derived from other entity
    • Loan Collateral
      • §1625  loan arrangements—deferred compensation—borrowing against the value of share-dependent unit—reduce risk, align with business strategy
    • Funded Subsidiary
      • §1626  annual election—bonus allocated to units based on value of special shares—undisclosed investments of funded subsidiary—units redeemable for value of special shares—GAAR inapplicable
    • Investment-specific Shares
      • §1627  annual election—bonus to units based on value of special shares—some subsidiary's special shares track parent's common shares—conversion between classes permitted—settlement cash or open market shares at company's discretion
    • Units Subject To Vesting
      • §1628  eligible employees—special subsidiary—new series of shares for each annual allocation—DSU units subject to vesting—plan credits for future compensation, not separate arrangement—redeemable and retractable preferred shares—employer loan secured by units—settlement in cash—hybrid plan, not all entitlements deferred compensation
    • Specific Portfolio Convertible Units
      • §1629  annual election—cash compensation to DSU units—additional compensation, subject to vesting—convertibility of units, fair market value—hedging of employer liability to redeem units—settlement in cash—no discretion to compensate for diminution of value
    • Limited Partnership Investments
      • §1630  senior officers and employees—shares tracking company and limited partnership investment—cash settlement net of withholding—open market net settlement if elected by participant
  • Valuation Of Units
    • Overview
      • §1631  valuation and payment times—multiple payments—value for payout—"depends" on value—measures accepted for listed shares—exchangeable shares
    • Downward Fluctuation
      • §1632  no value reduction offset—sponsor undertaking not to grant offsetting units—reorganizations, exchanges, unit allocation, as offsetting events
    • Timing And Other Factors
      • §1633  reducing of impact by timing—tracking shares not exposed to reduction—retirement benefit linked to DSU plan
  • End Of Employment
    • Retiring Allowances Policy
      • §1634  end of employment, retiring allowances criterion—same test for DSU plan—employment with entity that is not corporation or related thereto—plan disqualification without loss of employment
    • Affiliate Termination Clauses
      • §1635  termination with employer or affiliate—loss of affiliate status—director and employee—employment at law
• 14. RSU §1635.1 - §1646
  • Focus
    • §1635.1  shares—units—bonus plans—deferral limitations
  • SDA Exception
    • Bonus To Be Paid
      • §1636  bonus "to be paid" within 3 years—two different periods referenced by ruling policy—employer period test—employee period test
    • Variable Salary
      • §1637  bonus as extra amount, not just variable—extra as discretionary award
    • Single Year Services
      • §1638  bonus for services in several taxation years, ineligible—multiyear bonus as future compensation
    • SAR Services
      • §1639  eligibility of multiyear awards—appreciation right, future services—no award before end of whole term—accrual year-by-year under new policy—apportionment of multiyear bonus
    • Goal-linked Services
      • §1640  multiyear metric—3-year exception—services in deferral period—annual bonus—multiyear metric
    • Postponement Period Services
      • §1641  units as bonus—bonus as comprising appreciation—conditions for deferral involving services—multiyear services—whole term appreciation
    • "To Be Paid" Within 3 Years
      • §1642  amount stated as payable after 3 years—amount not determined when payable—payable and available for payment—"to be paid" but not in fact paid—bonus and top-up distinct
    • Late Bonus Payments
      • §1643  entire bonus excluded from exception plan if any payment beyond 3-year deferral—deferred amount, offside tax purpose required—inability to meet payment deadline—deduction of forfeit
    • Staggered Units
      • §1644  bonus paid in units—units with different redemption terms—latest term beyond 3-year deferral—structuring bonus as 3 awards
    • Bonus Paid After Retirement
      • §1645  salary or wages—not pension or retiring allowance
    • Investment Contract
      • §1646  units based on leveraged investment contract—accrual not interest
• 15. UNIT EXCHANGE §1647 - §1672
  • Plan Continuity
    • Time Frames
      • §1647  "corporation related thereto"—time of arrangement—time of services rendered—time of end of employment—time of dependent-share settlement—same corporation related thereto, different corporations in different time frames
    • A Workable Interpretation?
      • §1648  arrangement in writing, original corporation as anchor—substitution of new anchor—conditions evaluated in relevant time frame—old anchor not necessarily related to new anchor—corporation related to old anchor or new anchor in applicable time frame—new arrangement, novation—deductibility of deferred amount by employer
    • Asset Acquisition
      • §1649  employment by purchaser—plan not compliant, services rendered to old employer—substitution of new employer as sponsor—compliant if old employer related corporation—end of employment following asset sale
  • Transaction Type
    • Share Acquisition
      • §1650  exchange of units—DSUs of purchaser for DSU of target—exchange as plan continuation—exchange as premature payout—exchange as compensation promise
    • Plan Consolidation
      • §1651  units exchanged—corporations within related group—exchange pursuant to conversion right added to unit—discontinuance of plan after exchange—unit exchange tax-free
    • Plan Amalgamation
      • §1652  amalgamation by continuation of plan—election to be governed by master plan, not subsidiary plan—no termination of subsidiary plan—plan continuity—unit exchange tax-free
    • Convertibility
      • §1653  different plans for different corporations in group—employment transfer within group—plan interchangeability—unit convertibility—forfeit of DSU unit for underwater appreciation unit
    • Corporate Division
      • §1654  split-off or spin-off—DSU plan adjustment—additional units to compensate for lower value of share
    • Directorate Policy
      • §1655  no amount receivable—no boot—units' value equivalent—same terms—related corporation
  • Conversion
    • RSU DSU Interconvertibility
      • §1656  convertibility as disqualifying maturity—directorate policy reversed, no ruling for conversion—remaining plan customization
    • RSU DSU Amendment
      • §1657  amending plan—not deferred amount—amendment not payout—units not benefit in kind—disposition of units, no income—no capital gain liability
    • SAR Freeze
      • §1658  SAR mounting costs—share option conversion—option for preferred shares and common shares—tax-free conversion—taxable cashout for preferred share rights—benefit deduction for common share benefit—employer deduction
    • SAR To EPSP Conversion
      • Overview
        • §1659  EPSP conversion—loan and dividend mechanics—SDA exclusion—share rollout from EPSP—employer deductibility
      • Disposition
        • §1660  conversion as disposition—dividend-equivalent—fundamental change—payment promise—exclusion of gain
      • Downward Protection
        • §1661  SDA exception—disqualification—reduction of impact—upward and downward
      • Profit-sharing Purpose
        • §1662  EPSP purpose—GAAR committee—share agreement—open market shares
  • 409A Maturity
    • Unit Exchanges
      • §1663  events incompatible, Canada and US—grandfathering for revoked policy
    • Residence-based Conditions
      • §1664  DSU maturities different, US and Canada—loss of employment as reduction or separation of service—compliance required for all possible maturities
    • Disqualification From Inception
      • §1665  change of control as termination—plan not compliant ab initio following ruling policy reversal
  • Unit Modification
    • §1666  changes affecting units—authority to amend, rights of unit holders—plan maximum units—limit ascertained in following year
  • Dependent Share Changes
    • Typical Clauses
      • §1667  reorganizational events, nomenclature—value adjustments protection—no downward fluctuation clause—change of control—offside changes—no change protection—exchange unrelated corporation
    • Protective Clauses
      • §1668  unit exchange—acquisition—continuity—compliance requirement—US plans
  • Plan Winding-up
    • Plan Terms
      • §1669  plan termination—continuous compliance—early termination as disqualifying payout—amending plan to modify term—intra vires power
    • Disqualification In Final Year
      • §1670  rulings accepting premature plan winding-up—disqualification, inclusion in last year—plan compliant in earlier year
    • Retroactive Disqualification
      • §1671  amendment to plan, noncompliant payout—inference of noncompliant intention—retroactive liability for amount deferred
  • Reassessment
    • §1672  inclusion of deferred amount in year becoming noncompliant—statutory reassessment limitation—year of liability or year of reporting?—deductibility of deferred amount inclusion
• 16. EMPLOYER DEDUCTION §1673 - §1720
  • Expensing
    • Overview
      • §1673  share compensation—many forms—options and shares—layers of limitations—expense incurred—not capital or prepaid—not contingent—unpaid within 180 days—special rules
    • Equity Expenditure
      • §1674  share for property exchange—expenditure denial or reduction—money reinvested—dilutive excess—cost as share par value—cost two-way consideration
    • Alcatel
      • §1675  SR&ED expenditure—expense on grant—expense on share settlement—accounting treatment—tax benefit and expenditure not matched
    • Dilution
      • §1676  corporate theory revisited—equity expenditure as dilution—property or services as money's worth—new policy trend—same dilution for share or cash settlement
    • Exceptions
      • §1677  remedial enactment—for greater certainty—broker remuneration—not included in expenditure—statutory cost—inadequate consideration—non-qualified securities
    • Recognition
      • Option Expenditures
        • §1678  option as contingent liability—GAAP recognition—option not obligation—option as value delivery—option as benefit by employer—reduction of income
      • Share Expenditures
        • §1679  expenditure by issuing shares—GAAP—share for property—share for debt—share for expenses—property contributed by shareholder
    • Limitation
      • Meaning Expenditure
        • §1680  share or option expenditure—outflows and inflows—amount figuring in computation—outlay or expense subsumed in expenditure—expenditure in computing income, taxable income or tax payable—remittances
      • Rules
        • §1681  denial rule—reduction rule—option sold—option reissued—statutory cost override—amalgamation exchanges—non-person entities
    • Option
      • Dual Definition
        • §1682  option as security—option as optional right—intent
      • Legal Concept
        • §1683  common or civil law meaning—primary or accessory contract—option as multiform undertaking—similar right—option or obligation
    • Interest
      • Interest In Taxpayer
        • §1684  interest and legal or financial concept—French rendering of interest as participation—participation as financial term—bijuralism amendments—consistent statutory use
      • Interest Caselaw
        • §1685  judicial consideration—inducement reimbursement limitation—provision amended—participation not restricted to direct right
      • Interest Directorate Policy
        • §1686  interest as economic stake—option as interest in taxpayer—not dealing at arm's length—limitation on entity subject to option
      • Interest In Option
        • §1687  option in respect of option—opposite interpretations—derivative interest
    • Because Of
      • Inflows And Outflows
        • §1688  expenditure denied or reduced—any expenditure paid with options or shares—only expenditures arising because of mode of payment—outflow based on prior obligation
      • Equity Consideration
        • §1689  because of options—payment—obligation to pay—cost incurred—appreciation not payment—because of shares—compliant agreement—shares assimilated to options
      • No Prior Liability
        • §1690  rebates deductible if paid—not deductible if paid with shares—no prior liability—expenditure because of share payment
  • Option Expenditures
    • Option Grant
      • §1691  no consideration—option for securities—option reissue—third-party costs
    • Option For Money
      • §1692  money as property—cost amount of money—money as consideration—cost determined by money—no dilution option issued for money's worth
    • Option For Services
      • §1693  bonus award as liability—liability discharged by issuing options—deduction of expense as incurred—unpaid compensation expense—no preexisting liability—option grant as cause of expense—option unrecognized as expense
    • Option Under Agreement
      • §1694  option as security under agreement—option as right to acquire shares—technical double denial—no reduction if expenditure denied or prohibited
    • Option For Option
      • §1695  cost of acquiring option—expenditure not inclusive of cost—net expenditure—because of payment of price—swap as option exchange
    • Option Settlement
      • §1696  cash settlement—deduction for compliant agreement—dilution caused by option—appreciation due to option—expenditure caused by surrender not issuance
    • Option By EBP
      • §1697  contribution to trust—employee benefit plan—open market shares—option grant by trust—benefit allocation—not expenditure
    • Option Expiry
      • §1698  option expiry—option for share swap—deemed disposition—arm's length exception—double exposure
  • Share Expenditures
    • Timing Of Consideration
      • §1699  timing of outflow not same as inflow—consideration as measure of inflow cost—variation of inflow value—time of issue—time agreed—time of transfer—whether excess included in amount
    • Bonus Shares Under Agreement
      • §1700  share bonus —share under agreement as options—no tax credit for share bonus—appreciation as mischief—CCPC employee deduction
    • RSU Plan
      • §1701  bonus payable in shares or cash—right to shares contingent—contingent right as option—reduction of expenditure by excess—excess as appreciation amount
    • Advances, Reimbursement
      • §1702  grantor not issuer—recharge for option or benefit expense—advance of recharge amount—cost amount of advance—advance as expenditure because of option or shares
    • Shares For Debt
      • §1703  loan by shareholder—principal repaid by issuing shares—debtor's gain or loss—creditor's consideration—reduction of forgiven amount
    • Equity For Interest
      • §1704  loan to corporation—interest payable by granting option—interest deductible as accrued—expenditure not because of payment—expenditure unpaid amount—option not received because of employment
    • Shares For Shares
      • §1705  CCPC shares—exchange—nil cost—share for share exchanges—statutory rules for reorganizations—directorate policy for reductions
  • Capital Expenditures
    • Overview
      • §1706  capital outlay, not deductible—contingent amount not deductible—legal obligation to pay or to reimburse issuer
    • Cash Settlement On Takeover
      • §1707  cancellation of options, when capital outlay—compensation expense or expenditure of enduring benefit
    • Planning For Acquisition
      • §1708  planning for cancellation—rights exchanged rather than extinguished
    • Eligible Capital Expenditure
      • §1709  cancellation not acquisition of right to share—cancellation payment as eligible capital property—repeal of eligible capital property provisions—cancellation payment not outlay for property, not depreciable
  • Option Settlement Costs
    • No Deduction For Share Settlement
      • §1710  benefit conferred—only for share issue or sale—vested person as the employee—no benefit conferred if rights disposed of—rights disposed of on death—transaction and administration costs
    • Cash Settlement
      • §1711  deductibility of compensation expense—policy review—no deduction if security sold or issued—deductible if cash-settled under agreement
    • Share Settlement
      • §1712  legally-binding agreement, no deduction—share settlement declined—cash settlement induced
    • Net Settlement
      • §1713  shares issued under compliant agreement, no deduction—share issued as consideration for rights, deduction allowed?—if compliant agreement when "the" shares determined, no deduction—net settlement as alternative agreement
    • Net Of Tax Settlement
      • §1714  deduction of tax withheld—cash benefit or share benefit—directorate policy reversed
  • Recharging
    • Overview
      • §1715  nondeductibility for any person, any income reduction—reimbursement by employer for settlement of share benefit, nondeductible—cash benefit, deductible—reimbursement as proxy—no benefit on shareholder.
    • Shareholder Benefit
      • §1716  cross border benefits—nondeductible reimbursement by subsidiary, no benefit—cost assumption by employer, no benefit
    • Financial Standard Valuation
      • §1717  shareholder benefit for unreasonable reimbursement—measure of benefit, intrinsic cost—acceptability of GAAP expense
    • Inducement, Benefit, Dividend
      • §1718  reimbursement by subsidiary for stock benefit conferred by parent—reimbursement not received in the course of earning income—no shareholder benefit—no crossborder dividend—GAAP expense, stated capital, tax benefit, dilution factor—administrative concession
    • Funding Agreement
      • §1719  no benefit if funding agreement, implicit or written—absence of obligation to reimburse or of consistent reimbursement practice—no benefit for forward coverage of agreement
    • Foreign Accounts
      • §1720  reimbursement by foreign subsidiary—deductibility in computing taxable surplus
• 17. WITHHOLDING §1721 - §1749
  • Overview
    • Basic Rules, Income Tax, EI And CPP
      • §1721  income tax, gross benefit—CPP contributions, gross benefit—EI premiums, gross benefit excluding non-cash—CCPC benefit excluded income tax, CPP and EI
  • Reporting
    • Reporting Benefits And Deduction
      • §1722  reporting benefit, box 14 and box 38—reporting benefit deduction—reporting CCPC benefits—actual payment not coinciding with reporting obligation—reporting CPP and EI
    • Employer Election
      • §1723  employer election, cashout—filing election, T4 code 86
  • Statutory Basis
    • Overview
      • §1724  income tax basis for withholding—deemed benefits as paid bonus—deemed paid or actually paid—consultants—professional employer organization—foreign payor
    • Actual Payments
      • §1725  agency policy before 2010—economic benefit as payment—actual payment not concomitant with deemed benefit—types of actual payment—actual payment subject to withholding?
    • Salary, Wages Or Other Remuneration
      • §1726  salary or wages equated to income—withholding for remuneration not restricted to income—nonincome stock benefit, paid as remuneration, technical exposure
    • Fees, Commissions
      • §1727  fees for service—option grant—option vesting—option exercise—compliance survey
    • Remuneration Paid As A Bonus
      • Double Deeming
        • §1728  withholding for bonus—amount withheld deemed paid—double liability—vested person as payee
      • CCPC Shares
        • §1729  no withholding for CCPC benefit—benefit on disposition of CCPC share, not on exchange
    • Independent Contractors
      • Stock Benefit
        • §1730  stock benefit for contractor—withholding on actual payment—subsidiary as contractor—non-resident employee not rendering services in Canada
  • Withholding Waivers
    • Overview
      • §1731  waiver of withholding—no waiver for non-cash—transitional measure—directors liability
    • Hardship
      • §1732  hardship formerly acknowledged for non-cash benefit—hardship still recognized for reasons other than non-cash
    • No Other Remuneration
      • §1733  no waiver even if no other cash remuneration—pay period
  • Settlements
    • Employee Benefit Plan
      • §1734  benefits under EBP—reporting, trust as employer—no EI nor CPP—other plans—retiring allowances—withholding if benefit non-cash?
    • Trusteed Arrangements
      • §1735  trust arrangement for sale of shares to employees—employer not trust regarded by agency as payor subject to withholding obligation
    • Cashless Exercise
      • Mechanics
        • §1736  cashless exercise, short sale or loan to finance option price—proceeds credited to employee account after withholding and expenses—cashless exercise, EI non-cash benefit?
      • Discrepancy In Value
        • §1737  value of shares, benefit—time of acquisition or time of short sale settlement—shares must be acquired and paid by employee
    • Net Settlement
      • §1738  net share or cash settlement—net value of rights paid in shares or cash—net settlement as disposition of rights—benefit deduction subject to election by employer—hybrid cashout
    • Acquisitions
      • §1739  acceleration of vesting—loan, exercise and sale of shares to Buyco—sale of rights to Buyco—withholding against proceeds
    • Recovery
      • §1740  guarantee for unpaid loan—no exercise until loan paid—employee termination—ascertaining exact withholding amount
  • Non-residents
    • Obligation To Withhold
      • §1741  employer or payor—taxpayer not subject to tax—taxpayer exempt from tax under treaty—refund on tax return filing—international law
    • Non-resident Exemptions
      • §1742  employment in Canada—resident employer or employee—permanent establishment—outcomes—exemptions—prior residence—subsequent employment—treaty exemption waiver— director meetings in Canada
    • Extra-territorial Operation
      • §1743  resident employed abroad—foreign employer—international law—territorial limitation—real and substantial link—employment contract—foreign pension plan—Quebec provincial limitation
    • Stock Benefits
      • Resident Payor
        • §1744  withholding, payment to non-resident employee—no withholding, person neither resident nor employed in Canada—duties in Canada, prorating deemed benefit—prorating benefit deduction
      • Reimbursement
        • §1745  employer as obligee—reimbursement as indicator of employer status—secondment, contract for services
      • Non-resident Payor
        • §1746  non-resident making grant of option to resident employee—withholding and reporting as non-resident payor—reimbursement by employer
    • Treaty Exempt Employees
      • Waivers
        • §1747  non-resident waivers—waiver, remuneration—employer certified waiver—waiver, payment for services—year of payment
      • Certification
        • §1748  employer certification, treaty exempt—qualifying non-resident employees—employee losing qualification
      • Employee Specific Waiver
        • §1749  employee providing services in Canada—employed by non-certified employer—employed by certified employer but not qualifying employee
• 18. INTERNATIONAL §1750 - §1850
  • Non-resident Benefit
    • Statutory Scheme
      • §1750  benefit deferred—employment continued as fiction—connecting benefit to source—treaty and statutory conditions
    • Computation Of Taxable Income
      • §1751  Division B income—Division D income—treaty income
    • Employment
      • §1752  meaning of employment—meaning of employed—person deemed employee and employment deemed to continue—limitation of deeming provisions
    • Income Earned In Canada
      • §1753  incomes from duties performed in Canada—Part I income aggregation—Division D, distinct employment source—connection to source that is employment in Canada—theories of connection
    • Connection Theories
      • Allocation To Year Of Grant
        • §1754  award of option as source—once source established, entire deemed benefit connected—no explicit support in language of provision
      • Apportionment Of Compensation
        • §1755  income earned as received—apportionment of compensation, not income—connection theories unsanctioned
    • Employment Connection
      • Hurd
        • §1756  statement of facts—three judgments, benefit taxable in Canada—no apportionment
      • Hurd TRB
        • §1757  wholly taxable in year of deemed receipt—no apportionment—option vested during employment in Canada
      • Hurd FCTD
        • §1758  wholly taxable in year of deemed receipt—employment in Canada deemed to continue
      • Hurd FCA
        • §1759  wholly taxable in year of deemed receipt—actual employment required in Canada—employment deemed continued if earlier employment is source
      • Hurd FCA, Dissenting Reasons
        • §1760  benefit not income from employment—no fictional employment in Canada—innate income, not income as defined by Act
      • Hale FCA
        • §1761  wholly taxable in year of deemed receipt—employment deemed still in existence—employment deemed exercised under treaty
      • Mullen, TCC
        • §1762  wholly taxable in year of deemed receipt—source of liability of non-resident as employment in Canada in year of grant
    • Remuneration Connection
      • Statutory Definition
        • §1763  stock benefit as "benefit of any kind whatever"—not necessarily remuneration
      • Treaty Definition
        • §1764  salary or wages defined under Act—same definition for tax treaty—stock benefit as salary or wages
      • Fixed, Periodic Payment
        • §1765  stock benefit not fixed—as lump-sum not periodic
      • Remuneration, French And English Terminology
        • §1766  remunération understood as compensation—modern usage inclusive—OECD terminology
      • International Acceptance
        • §1767  dependent services treaty provisions, scope defined by "salary or wage"—definition of remuneration unnecessary—deemed income, deemed employment, no apportionment
      • Technical Priority
        • §1768  exclusive basis for stock benefit liability for non-resident—employment in Canada
    • CRA Option Methodology
      • CRA Policy, Prior To 2012 Apportionment
        • §1769  apportionment based on employment in Canada in year of grant—compelling evidence required for allocation to vesting period
      • Reaction To Hurd
        • §1770  apportionment—year of grant unless otherwise established—generic basis and territorial basis for apportionment
      • CRA New Position, 2012
        • §1771  apportionment for foreign source income—days of employment in country—OECD method—foreign tax credit—stock option source fictions
      • Formula
        • §1772  days during vesting period, contractual requirement—employment days or work days—no official sanction of OECD method, administrative concession
    • CRA Hybrid Methodology
      • Other Stock-based Benefits
        • §1773  apportionment for noncompliant stock options—SAR and PAR—salary deferral arrangement, DSU and RSU—employee benefit plan—international allocation of deferred benefits—hybrid methodology
      • Scope And Rules
        • §1774  in-the-money allocation to grant year—appreciation allocated to vesting period—benefits subject to hybrid method—stock option benefits with starting value
      • Example
        • §1775  restricted shares—immigration—deemed benefit under agreement—basis for foreign tax credit
      • CRA Assumptions
        • §1776  when employment income is earned—initial value apportionment—vesting period allocation—directorate policy evolution—theoretically neutral assumption
      • Repudiation Of OECD?
        • §1777  stock option, future services or past services—OECD presumption, future services—hybrid assumption, initial value for past services—not consistent with OECD for stock options
      • Hybrid Vesting Conditions
        • §1778  evolving financial and tax standards—vesting condition under financial standard—vesting as employment condition
      • Fact-based Determination
        • §1779  factual determination—vesting as compelling evidence?—release of public policy—guidance for period not covered by announcement—revocation of past document
    • OECD Methodology
      • Employment Income, Source Country
        • §1780  apportionment between country of source and country of residence—termination payments and stock benefits—country of source, income derived from employment exercised in country
      • Termination Payments, Stock Benefits
        • §1781  lump-sum payment apportioned to source country—stock option settlement after termination, same apportionment as before
      • Damages, Cancellation Of Stock Options
        • §1782  settlement for surrender of stock options—damages taxed in source state—damages treated as employment income under treaty
      • Benefit Characterization
        • §1783  OECD method blind to benefit characterization under national law—gain treated as employment income or vice versa
      • Sourcing Benefit
        • §1784  apportionment of benefit—employment exercised in country during vesting—benefit measured from grant to exercise—interpretation of duties performed—legal basis for OECD method?—applicability to other benefits
      • Reference Periods
        • §1785  grant to vesting period, employment source—grant to exercise period, employment income—post-exercise period, gain—entire benefit taxable as employment income or gain
      • Fact-based
        • §1786  stock option as reward for services between grant and vesting—assumption rebutted by relevant facts—vesting versus grant to vesting period
      • Future Services Presumption
        • §1787  no apportionment to services during vesting period—future services presumption
      • Example: CCPC Shares
        • §1788  apportionment of benefit based on grant to vesting period—post-exercise benefit as gain, not employment income—treaty protection for non-resident and resident
      • Past Services
        • §1789  awards for past performance—award as supplement to prior remuneration
      • Blocking And Forfeiture
        • §1790  earned but not exercisable, treat as vested—earned but forfeitable, treat as vested—not earned before exercise, treat as unvested
      • Circumstantial Service
        • §1791  grant to reward change in job or job location—treat as vested when job performed
      • Restricted Shares
        • §1792  restriction on shares, treat as vesting condition—gain on shares as employment income
      • Conditions Altering Vesting Period
        • §1793  accelerated term, treat as vested—extended term, treat as vested
      • Employment With Group
        • §1794  employment with different employers, treat as vested—group status under Canadian provisions—vesting contractual terms
      • Method Limitations
        • §1795  no treaty relief for taxation by state of residence—foreign tax credit, taxation in the same year—different times for taxable events—planning
    • Methodologies
      • Example: OECD Method Compared To Pre-2012 Policy
        • §1796  same year tax, foreign tax credit—taxable event mismatches
    • 183-day Requirement
      • General Rule
        • §1797  not more than 183 days—employer not resident—not borne by permanent establishment—remuneration as apportioned
      • Annual Reference Points
        • §1798  taxation year of benefit or credit—taxation year of employment—taxation year of presence—example
      • Days Of Residence
        • §1799  days of presence in source state—omission of days during period of residence
      • Example: Days Of Employment During Residence
        • §1800  days of presence non-resident excluded—residence status, reference year
      • Fiscal Year Concerned
        • §1801  different reference years—source state year, OECD preference
      • OECD 1991 Report, Days Of Presence
        • §1802  days of physical presence, not days performing activity—list of days establishing presence—holidays—Canadian policy, 1991
      • OECD Commentary, Days Of Presence
        • §1803  days of presence, not only work days—days connected with employment including coinciding holidays
      • Example #1: No Apportionment Without Necessary Presence
        • §1804  apportionment of non-resident income, criteria relevant to vesting—183-day requirement as shelter from source country tax
      • Example #2: Days Of Presence During Vesting Period
        • §1805  counting days of presence—apportionment period, days for vesting—183-day requirement, all days
      • Example #3: Days Of Presence During Period Of Residence
        • §1806  apportionment based on days of presence—count subject to 183-day requirement—days of residence, exclusion from source state count
      • Not Employer Resident In Source State
        • §1807  no presence minimum if remuneration paid by employer resident in source country—payment by employer, not grantor or issuer
      • Not Borne By Permanent Establishment
        • §1808  no presence minimum if remuneration borne by permanent establishment of employer resident in source country—cost assumed or reimbursed—item-by-item determination
      • Deductibility
        • §1809  borne by permanent establishment—stock benefit deductibility in Canada—chargeable expense, not necessarily deductible—deductible when?
    • Director's Stock Benefit
      • §1810  benefit taxable in state of company's residence—benefit after exercise treated as gain
    • Timing Of Relief Claims
      • §1811  timing mismatches—reassessment—competent authority procedure—notice of objection
  • US Treaty Benefit
    • Remuneration
      • §1812  common understanding of undefined terms—meaning of remuneration, inclusive of stock benefit—US treaty, treatment of stock options similar to OECD Model
    • Relief For Stock Option Benefit
      • §1813  remuneration derived from option—benefit from realization of option or shares
    • Relief Based On Benefit Apportionment
      • §1814  basis for apportionment, principal place of employment—grant-to-exercise period—exception for past service
    • Employer Or Related Entity
      • §1815  entity as individual, corporation, trust, partnership—relief not limited to benefit under legally-binding agreement
    • Taxing Authority
      • Benefit Taxed In Residence State
        • §1816  no restriction on taxing authority of residence state—taxation of benefits earned outside but deemed received by resident
      • Residence State Obliged To Provide Credit
        • §1817  taxing authority, state of residence—no limitation, inclusion of benefit—apportionment of benefit as foreign source—foreign tax credit
    • Principal Place Of Employment
      • Allocation Principle
        • §1818  principal place of business—grant-to-exercise period—period-by-period determination versus day-by-day
      • Place Of Reporting
        • §1819  place of principal employment, where employee reports—interprovincial allocation criteria—duration of employment at the place
      • CRA Interpretation
        • §1820  CRA workday method, principal place of work day-by-day—principal place for period or periods?—day count for certification
      • US Internal Revenue Code
        • §1821  US international allocation—facts and circumstances determination—not necessarily day-by-day or period-by-period—US domestic stock benefit allocation, grant-to-vesting
    • Apportionment Methods
      • Priority Of The Act
        • §1822  constant method under Division D for all taxpayers—variable method as required under treaty
      • Treaty And OECD Method, Difference
        • §1823  apportionment—principal place of employment—no common definition of income—post-exercise gains as employment income under Treaty
    • Source Limitations
      • Overview
        • §1824  $10,000 of remuneration from source state—more than 183-days of presence in source state—differences with OECD method
      • Threshold For Apportioned Years
        • §1825  year of benefit not necessarily threshold year—threshold year as apportionment year
    • $10,000 Or Less Threshold
      • Year Reference
        • §1826  remuneration more than $10,000 for each year as apportioned—threshold for each straddling calendar year—stock benefit as distinct source with its own threshold?
      • Example: Threshold For Each Calendar Year In Apportioned Period
        • §1827  option granted to Canadian resident—employment exercised partly in the US—benefit inclusion in Canada—gain on disposal of shares in the US
        • §1828  allocation of taxing rights—resident state and source state—no common base of tax liability
        • §1829  apportionment over grant-to-exercise period—application of formula—$10,000 exemption for each apportioned year—actual remuneration combined with apportioned benefit?—grant-to-vesting and grant-to-exercise compared
    • More Than 183 Days Threshold
      • Days Count
        • §1830  days of presence, definition—part of day—excludes days during which resident
      • Apportioned Year
        • §1831  presence in 12-month period—no apportionment of benefit to fiscal year without presence
    • Payment By Resident
      • Overview
        • §1832  paid by any resident person—independent service contracts—disguised employment
      • How Stock Benefit Is Paid
        • §1833  benefit conferred under option as payment—benefit deemed remuneration paid as bonus—employer as any person making payment
      • Actual Payment By Employer
        • §1834  stock benefit, actual and deemed payment—issuance of shares as payment—deemed benefit as payment—payor of remuneration for particular employment—employer as ultimate payor
      • De Jure Employer
        • §1835  employer as matter of law—resident payor, not resident employer
      • Notional Payment
        • §1836  payment of remuneration—not payment for fiscal year concerned—paid in year apportioned?
    • Borne By Permanent Establishment
      • Remuneration Deductible
        • §1837  remuneration charged to permanent establishment—"borne by" means deductible—deductibility, stock benefits
      • Benefit As Distinct Source
        • §1838  item-by-item determination—deductible items taxable in source state unlike nondeductible items
  • Emigration And Immigration
    • Overview
      • §1839  disposition of property—exclusions
    • "Excluded Right Or Interest"
      • Funded Or Unfunded
        • §1840  EBP not funded not SDA—SDA exception plans, RSU DSU
      • Rights Under Agreement
        • §1841  option outside agreement section 7—trusteed option plans—trust as EBP—personal trust—reportable property
      • CCPC Shares
        • §1842  emigration, benefit deferred, capital gain—immigration, end of deferral—election and security—cost adjustment
    • Excluded Remuneration
      • Residual Exclusion
        • §1843  right in a year—deferred compensation—salary deferral arrangements, RSU and DSU—SDA liability for immigrant's employment abroad—SDA liability for deferred amount of emigrant
      • Salary Deferral Arrangement
        • §1844  deferred amount—benefit in earlier taxation year—not remuneration in later year—not excluded
      • Appreciation Right
        • §1845  appreciation rights—lump-sum as remuneration—how to allocate lump-sum—remuneration for current or past services—exclusion for post-departure services—SDA exception payments, RSU DSU
      • Failed Exclusion
        • §1846  remuneration right not excluded—employment income—capital gain on deemed disposition—double tax liability after departure
      • Restricted Shares
        • §1847  shares subject to transfer restrictions—restricted shares not future remuneration—liability for gain on emigration
    • Restructuring Options
      • Immigration
        • §1848  planning for immigration—benefit tax trap—exercise options—change vesting—disqualify the agreement
      • Emigration
        • §1849  apportionment of benefit as non-resident—benefit inclusion as resident, foreign tax credit—returning immigrant
    • Foreign Property
      • §1850  reporting foreign property—cost amount of option—option as capital property
• 19. MONETIZATION §1851 - §1923
  • Direct Exit
    • Tax Outcomes
      • §1851  exit by employee—benefit deduction—redemption of shares—double tax—sale of shares—option settlement—comparative tax—optimum extraction
    • Offsetting Discount
      • §1852  discount price—fmv price—transition—valuation challenge—safety with higher value—making employee whole—remuneration—free shares—loan write-off—increase grant size—freeze shares
    • Skin In Game
      • §1853  equity stake—net settlement—option exchange—sale of option right
    • Extant Options
      • §1854  option cancellation—death retirement, termination—control change—no prescribed condition for option—option dividend-equivalent—option price averaging
  • Tracking Shares
    • Family Office
      • Overview
        • §1855  advisor compensation—carried interest—corporate shares—partnership—tax risks
      • Business Income Uncertainties
        • §1856  investment funds—compensation template—carried interest—common international approach—Canadian exception—policy insufficiency—assessing policies wanting
      • Employment Income Uncertainties
        • §1857  key person—performance incentive—interest as employment benefit—shares in lieu of interest—USA and UK concessions—Canadian tax risks
      • Excise Tax Uncertainties
        • §1858  investment funds—excise tax—EU UK USA—Canadian tax risks—exempt supply GST
      • Proposed Structure
        • §1859  trading and investment entities—salary and carry—tracking shares—assumptions
      • Structuring Tracking Shares
        • §1860  tracking share use—carry simulation—special clauses—after tax return—no employment benefit—no GST exposure
      • Structuring Business
        • §1861  investment and trading subsidiaries—tainting investments—capital gains deduction—prescribed share—variant
      • Structuring Advisor Compensation
        • §1862  advisor carry as fee—compared to tracking share—fee not commission—GST on fee—net return
      • Structuring Redemption Investment Subsidiary
        • §1863  tracking shares—full carry earned—after tax entitlement—taxable dividend—capital dividend—net return compared to partnership carry—stock bonus alternative
      • Structuring Redemption Trading Subsidiary
        • §1864  tracking shares—full carry not earned—tax-paid entitlement—versus partnership carry—intercorporate dividend—butterfly
  • Paid-up Capital
    • Overview
      • §1865  corporate law—value of past services—full payment—fair equivalent of money—Delaware—ABA Model—return of capital—tax limitations
    • Consideration
      • §1866  consideration as measure of cost—as measure of state capital—two-way consideration—consideration for shares—employee award misstatement
    • Option Shares
      • §1867  option as prior commitment—consideration for option shares—conditions under agreement—past services during vesting period
    • Bonus Shares
      • §1868  share bonus—deferred payment—amount of bonus at grant—post-grant services—value of right to shares—board judgment
    • Deferred Compensation
      • §1869  bonus deferral plan—end-of-employment plan—credit of bonus—share entitlement—compensation liability—consideration for past services—deemed dividend
    • Future Services
      • §1870  signing award—consultant—employee—past or future services—commitment—intellectual rights—board determination—unpaid shares
    • Grantor Shares
      • §1871  three-party agreement—grantor neither issuer nor employer—shares paid in cash—deduction denied—recharge
    • Recharge
      • §1872  consideration—amount owing for share—not consideration from issuee—past services—deductibility—share expenditure
    • Board Determination
      • §1873  pre-approval of shares—validation of assumptions—board delegation—share versus option
    • Deemed Dividend
      • §1874  asset/liability balance—self-cancelling—past services—liability for bonus—liability under option
    • Amount Paid
      • §1875  benefit computation—amount payable for shares—exclusive of untaxed services—tax-paid amount
    • Double Liability
      • §1876  deemed dividend, purchase or cancellation CCPC shares—benefit and dividend with capital loss offset—double tax relief inapplicable—stock benefit safe harbour?
    • Policy
      • §1877  paid-up capital—materiality—elusiveness—no corporate sanction—subsidiarity
    • Convertible Instrument
      • Overview
        • §1878  stated capital—shares used as payment—corporate safeguards—income tax rules—return of capital
      • Agnico-Eagle Mines, Facts
        • §1879  repayment in shares—repayment as discharge of debt amount—repayment as share subscription—repayment as share value
      • Agnico-Eagle Mines, Reasons
        • §1880  Canadian tax results—company law precedent—consideration received—consideration paid—economic substance—one-way consideration—two-way consideration—timing
      • Employment Award
        • §1881  stated capital—interpretation of debenture terms—time factor—consideration received—consideration given up—conditional options—additional consideration
      • Founder Debentures
        • §1882  founder loan—legally-binding agreement—past services as consideration—high puc shares—reduction of capital—freeze—indefinite benefit deferral
      • Directorate Policy
        • §1883  share payment, determination of cost—consideration agreed by parties—asymmetry, stated capital less than value
  • Drawing Liquidity
    • Comparing Alternative Sources For Cash
      • §1884  typical large employer array of compensation programs—extracting funds from plans—tax cost versus financial opportunity
    • Example: Plans From Which Funds Drawn
      • §1885  assumptions, stock bonus plan shares
      • §1886  assumptions, discount stock purchase plan
      • §1887  assumptions, stock option incentive plan
    • Example: Net Funds Required By Taxpayer
      • §1888  realization, share sale alternative, tax values
      • §1889  realization, share sale alternative, tax and net cash
      • §1890  realization, option cashless exercise alternative
      • §1891  realization, option cashless exercise alternative
      • §1892  realization, option cashless exercise alternative, no specific identification filing
    • Example: Comparison Equity Position
      • §1893  realization, share sale and option cashless exercise alternatives compared—opportunity cost of reduced equity ownership
  • Settling Arrangement With Shares
    • Overview
      • §1894  settlement of deferred compensation, stock benefit—safe harbour for taxation year of settlement—deduction for forfeited deferred amount
    • Bonus Exception Plan
      • §1895  share settlement of bonus—right to bonus replaced by right under agreement to issue shares—safe harbour—share settlement in original terms
    • Early Policy
      • §1896  units brought into income when settled by stock options—inclusion as option cost—disposition of units—deduction at SDA termination—promise to pay settled by right to share
    • Indefinite Deferral, Agreement To Issue Shares
      • §1897  election to defer cash bonus—entitlement to appreciation right with whole starting value—extension of maturity date, not SDA—change of maturity, not disposition of rights
    • Bonus Option Plan
      • §1898  directors and employees plan—optional receipt of bonus as stock options, election up to undisclosed percentage—option exercisable at undisclosed percentage discount—agreement to issue or sell shares, safe harbour
    • Stock Appreciation Right Exchanged For Stock Options
      • §1899  nil starting value appreciation right, exchanged for stock option—accelerated right to cashout, no payment—new promise to pay, or payment
    • Performance Appreciation Right Exchanged For Stock Options
      • §1900  performance appreciation, stock option grant—safe harbour on issuance of options—cancellation of rights, disposition—not capital gain if later income inclusion, same property—option different property, safe harbour
    • Appreciation Right Surrendered For Shares
      • §1901  agreement to issue shares without prior award of options—safe harbour for shares issued to satisfy entitlement under SAR—contingent right to shares made redundant
    • DSU Converted To Stock Option
      • §1902  maturity of end of employment plan—ability to convert into stock option plan prior to maturity, noncompliant—effect of unexpected conversion
    • Deductibility
      • §1903  discretion to settle in cash or shares—former agency policy, agreement formed if shares issued—post-Transalta policy, preexisting binding obligation to issue shares—amending plan to provide for share settlement
    • Open Market Shares
      • §1904  brokerage fees, benefit for participant—administration fees, not benefit—cost of shares, open market—cost base, treasury
    • DSU Post-mortem Provisions
      • §1905  payment on death, not periodic or death benefit—"right or thing" if no election prior to death—right to treasury shares disposed of
  • Marketmaking
    • Overview
      • §1906  share owned as employee—buyout under share ownership or incentive plan—capital gain countenanced by directorate—policy reversal 2012—acting in concert
    • Buyout By Corporation
      • Pre-2012 Policy
        • §1907  employee share purchase plan—sale to buyco—GAAR—dealing at arm's length—capital gain—dividend on acquisition—financing buy-back
      • Common Employee As Surplus Stripper
        • §1908  share purchase—entity other than issuer—surplus stripping—not at arm's length—accommodation—true divestment—employee buyco—risks and purpose
      • Compensatory Equity
        • §1909  corporate distribution—option buyout—deductible expense—share redemption—benefit added to cost—capital loss—double liability
      • Subordination
        • §1910  share exit predetermined—arm's length condition—CCPC option inclusion—option benefit deduction—insurable employment—option and buyout inseverable?—commerciality
    • Buyout By Trust
      • Overview
        • §1911  transfer to trust—acquisition in any manner—indirect acquisition—avoidance transaction—abuse or misuse—market making, limited recognition—trust loan—buying and selling requirement—policy—employee benefit plan
      • EBP
        • §1912  employee buyco—employee incentive or ownership shares—2012 reversal—use of trust—employee benefit—marketmaking as economic benefit—acting in concert
      • Contribution
        • §1913  contribution to another person—contribution as payment—earmarks—guarantees—bona fide loan—buyout at overvalue—difference as contribution
      • Mechanics
        • §1914  cost of legal and administrative services—GAAR reviewed structures—funding alternatives—prepayment—dividend—share redemption—non-interest loan
      • Taxable Payments
        • §1915  any payment—exclusionary clause—other arrangements—taxable capital gain—sale proceeds
    • Buyout By RCA
      • Overview
        • §1916  RCA tax—deemed dividend on share redemption—capital loss of individual offset by capital gain—allowable business investment loss—RCA capital loss offset by any income—affiliated person—scenarios and caveats
      • Shares As Prohibited Investment
        • Specified Beneficiary
          • §1917  investment by member—significant interest in employer—expanded definition—specified shareholder—threshold deeming provisions—trust or partnership
        • Signficant Interest
          • §1918  specified beneficiary—prohibition for any significant interest—when no prohibition—marketmaking for significant interest—not shares of employer—not shares of related corporation
      • RCA Advantage
        • Overview
          • §1919  share sale—fair market value—RCA advantage—value shift or strip—diversion payments—general benefit
        • Value Shift Or Strip
          • §1920  share sale to RCA—not specified beneficiary—tax benefit purpose—value for value transaction—benefit without value increase—fair market value as normal—no strip or diversion
        • General Advantage
          • §1921  economic benefit—when benefit conditional—transfer at overvalue or undervalue—loan exclusion—no exclusion for contribution—income inclusion of payment
      • GAAR
        • §1922  tax benefit—capital gain deduction—computation of RCA tax—abuse or misuse—artificiality—sale between employees—sale between third party and RCA
      • Special Tax
        • §1923  taxable preferred shares—buyout undertaking—minimum and maximum—fair market value exceptions—short term preferred shares
• EQUITY STRUCTURES §3000 - §3016
  • Newsletter Releases
    • §3000  Tax planning for stock-dependent arrangements.
  • EPSP For Start-up Reallocation
    • §3001  shares acquired by EPSP — EPSP benefit taxable upon profit allocation or income distribution — reallocation not taxable for EPSP — appreciated gain deferred for participant — when not stock benefit
  • Marketmaking Trust For Incentive Plans
    • §3002  trust as buyer of shares— surplus stripping—dividend—GAAR—employee benefit plan
  • RCA For Employee Buyout
    • §3003  employee buyout—employee buyco—capital loss—retirement compensation arrangement—prohibited investment—advantage—GAAR
  • Exits For Options
    • §3004  private corporation—sale of shares—redemption—option settlement—comparative tax—making employee whole—option cancellation—skin in the game—dividend-equivalent—option conditions
  • Option Transfer To Holding Corporation
    • §3005  fair market value versus intrinsic value—no benefit for transferor—attribution of benefit on share acquisition—loan funding—interest deductibility—option premium extraction—safe income—net after personal tax—outcome as percentage of share appreciation
  • Loans For Startups
    • §3006  redemption—double liability—return of capital—issuance of shares—past services as consideration
  • Returning Share Capital
    • §3007  capital return—tax-paid shares—stated capital—post-grant services—validation past services—multiple series—separate grantor
  • Tracking Shares For Carried Interest
    • §3008  partnership tax uncertainty—business structure—redemption—net tax return—comparison partnership
  • Transaction Incentive
    • §3009  change of control checklist—salary deferral—metric—discretionary—performance goal—trust—bona fide purpose—risk of forfeiture
  • M&A Transactions
    • §3010  contingent amounts— resolving uncertainty—holdbacks—DSU plan continuity— nontaxable damages— what about surrogatum?
  • Offside Option Exchanges
    • §3011  option exchange—trilogy—grantor, issuer, employer—designated person—grantor and buyer not at arm's length—grantor interposition—asset acquisition including grantor shares
  • Open Market Shares
    • §3012  risk assessment—open market shares for trust—open market shares for employer—out-of-pocket costs—self-contradictory policy—discretionary arrangement
  • Trusts Holding Shares For Managers
    • §3013  checklist—held by a trustee in trust—allocation—legally-binding—property interest—beneficial interest—notional—vested—sale of shares—agree before transfer—unit trust—discretionary arrangement—model clauses
  • What Is A Legally-binding Agreement?
    • §3014  no formal agreement—acceptance—corporate procedures—shareholder approval—employer obligation—proof—condition precedent—plan discretion—benefit delivery
  • Cost Erosion In Share Transactions
    • §3015  expenditure limitation—"because of"—Employment Benefit Plan—option for option—share for share—RSU deduction—dilution theory
  • Key Employee Share Grant
    • §3016  "Otherwise Trust"—impediments to standard structure—plan overlap—averaging—prescribed trust—reversionary trust
• MODEL CLAUSES §4001 - §4010
  • Omnibus Plan Model
    • Change-of-control
      • Concept And Basic Rules
        • §4001  simplicity—modular options—grant settlement or continuation
      • Illustration Of Methodology
        • §4002  definitions—scope—actions—settlement—continuation—tax
      • Existing Plan Example
        • §4003  survivor—discretion—definition
      • Scope: Rules 1-4
        • §4004  change-of-control—participants—subplans—awards and grants
      • Sole Discretion: Rule 5
        • §4005  sole discretion—consent—board—shareholders—action precluded
      • Continuing Grant: Rule 6
        • §4006  equality—fairness—grant value—successor—conversion—expiry date—notice
      • Settlement: Rule 7
        • §4007  vesting—cash or shares—award value—share value—expiry—net value—takeover—consummation
      • Timing: Rule 8
        • §4008  effective date—payment deferral—rescission
      • Termination: Rule 9
        • §4009  employee termination—grace period—option—share value—grant value—shares—continuation
      • Tax Protection: Rule 10
        • §4010  agreement—exchange—benefit deduction—SDA exceptions—nonqualified securities—provincial—compliance
• CONFERENCES §5005 - §5032
  • RCA For Non-resident
    • Martin TCC 2024
      • §5005  deduction of RCA contribution by non-resident
    • Facts
      • §5006  portion of gross compensation contributed to RCA in each contract year
    • Inclusion Sequences
      • §5007  conflicting inclusion methodologies versus question of fact
    • Gross Income
      • §5008  gross compensation includes contribution to RCA because of constructive receipt
    • Quality Of Income, Constructive Or Indirect Receipt
      • §5009  Income under Division D is composed of amounts having quality of income, including those indirectly or constructively received
    • Takeaway
      • §5010  RCA contribution not deductible from sources not subject to Canadian taxable income
  • Constructive Receipts
    • Quest For Consistency
      • §5011  making sense of many decades of caselaw and CRA policies
    • Judicial And Administrative Visions
      • §5012  minimalist interpretation prior to 2024, core CRA policy and its misreading
    • Cases By Category
      • §5013  application of doctrine for employment income, significance of Sussex and Martin
    • Benefits Received Or Enjoyed
      • §5014  trust contribution as benefit, meaning of statutory exclusion
    • CRA Positions
      • §5015  many inconsistencies, core policy divergence, flex benefits and pension conversions
  • Tracking Share
    • Agenda
      • §5016  minimizing risk with share tracking structure
    • Use In Business And Tax
      • §5017  share entitlement as proxy for entity, asset basket, or income stream
    • Class Features
      • §5018  liquidation entitlement defined as tracking interest
    • Transaction Sequence
      • §5019  rights exchange and rights buyout
    • Tax Risk
      • §5020  comparison of risk factors: profits interest, transaction incentive and tracking shares
  • Otherwise Trust
    • Agenda
      • §5021  alternative for 7(2) arrangements
    • Anatomy Of 7(2)
      • §5022  Why do we need 7(2)? How it works
    • Running The Gauntlet
      • §5023  many uncertainties: EBP, personal trust, 75(2), 47(1), SDA
    • Finding A Way Around
      • §5024  the statutory language, trust versus agency, CRA escrow policy
    • Legal Steps
      • §5025  share grant, transfer, vesting, release, forfeiture
    • Tax Outcomes
      • §5026  favourable results, derisking
  • Discretionary Employee Trust
    • Agenda
      • §5027  designing a founder trust
    • Exclusionary Clause
      • §5028  hazards engendered by the McNeely decision
    • Mixed Payments
      • §5029  exclusionary clause as a fail-safe provision
    • Engineering Trust Rollout
      • §5030  Employee contributions or loans to avoid EBP
    • Required Qualifications
      • §5031  Navigating the trust qualifications: 7(2), 75(2), 4800.1
    • Business Application
      • §5032  Rollout trust essential to founder planning
• LIVESTREAM §6000
  • Next Event Announced July 15, 2025
    • §6000  
• READER QUESTIONS §7000
  • Submission Form
    • Procedure
      • Any Topic
        • §7000  questions and answers -- anonymous -- answers prepared by author -- panel of practitioners — not legal or professional advice