Equity for Management

• Introduction
  • Acknowledgement
  • Terminology
  • Equality And Certainty
• I. INCENTIVES AND INVESTMENTS
  • The Agreement
  • The Offer
  • The Benefit
  • Benefits Outside Section 7
  • Benefit Upon Conversion
  • Benefit From Trust
  • Benefit Upon Death
  • Bonus Or Restricted Shares
  • Benefit Deferral CCPC
  • Benefit Outside Employment
  • Benefit Deduction
  • Prescribed Shares
  • Election By Employer To Forego Deduction
  • Deferred Compensation
  • DSU
  • Share-based Dividend Equivalents
  • Bonus Deferral
  • Supplementary Pension
  • Other Deferrals
  • Non-resident Benefit
  • US Treaty Benefit
  • Withholding And Reporting
• II. REORGANIZATION AND MONETIZATION
  • Direct Exit
  • Tracking Shares
  • Benefit Attribution
  • Option Transfers
  • CCPC Share Dispositions
  • Paid-up Capital
  • Selling Deferred Shares
  • Drawing Liquidity
  • Price Changes
  • Prescribed Share Acquisitions
  • Prescribed Share Swaps
  • Prescribed Share Agreements
  • Repricing Amendments
  • Gift Of Securities
  • Non-qualified Securities (NQS)
  • NQS Awards
  • NQS Vesting Changes
  • Ordering NQS
  • NQS Deduction
  • Option Changes
  • Option Surrenders
  • Rights Ceasing To Be Exercisable
  • Option Exchanges
  • Deferred Share Exchanges
  • Settling DSUs
  • Unit Exchanges
  • Emigration And Immigration
  • Expensing
  • Option Expenditures
  • Share Expenditures
  • Capital Expenditures
  • Option Settlement Costs
  • Recharging
  • Marketmaking
• EQUITY STRUCTURES
  • 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
• RISK ASSESSMENT
  • Open Market Shares

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• Introduction §1001 - §1003
  • Acknowledgement
    • §1001  brief history—contributions—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
• I. INCENTIVES AND INVESTMENTS §1004 - §1431
  • 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  verbal agreement by president—procedures for option grant incomplete—no valid corporate grant—legally-binding agreement?
    • Leverage Acquisition
      • Gesser Estate FCA
        • §1015  share acquisition—no recourse loan—purchase of shares by employee—reconstructed as employee option—loan forgiven
    • Transalta TCC
      • Plan Terms
        • §1016  stock appreciation award—conditional on comparative stock performance—award discretionary under plan terms
      • Obligation
        • §1017  agreement to issue shares—legally-binding agreement—discretion to settle shares or cash
      • Contract
        • §1018  no prior unilateral contract—expenditure deductible, share settlement
      • Precedent?
        • §1019  agreement when offer made—agreement when discretion exercised—agreement as legal obligation, further requirements?
    • Directorate Policy
      • Discretionary Share Bonus Plan
        • §1020  award fully discretionary—discretion as to quantum and cash or share settlement—where employer later commits to issue of shares, binding agreement
      • Informal Undertaking
        • §1021  no binding commitment—allocation of shares, no specific award—notice instituting right to exercise option—no agreement prior to notice
      • Deferred Compensation
        • §1022  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
        • §1023  discretionary bonus—partial discretion exercised before settlement—agreement to issue shares where employer binds itself
      • Deferred Stock Grant
        • §1024  right to shares—acquisition deferred for fixed period—agreement, cost not deductible—structured as restricted share bonus, cost deductible
      • Restricted Stock
        • §1025  stock issued or to be issued subject to restriction—no discretion—agreement to issue shares, cost not deductible
      • Stock Appreciation Right
        • §1026  settlement cash or treasury shares or combination—discretion, no agreement, no deduction of cost
      • Performance Shares
        • §1027  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
        • §1028  offer to subscribe for any number of shares—employer bound to accept subscription—agreement, discount not deductible—discretion to accept subscription
    • Legally-binding Requirement
      • The Agreement As Benefit Conferral
        • §1029  agreement as employment benefit—benefit as employer's promise under employment agreement—discretion unessential to promise
      • Tautology
        • §1030  legally-binding, as nondiscretionary agreement—legally-binding, as perfect contract after authorization and approval
      • Corporate Process
        • §1031  many steps in corporate process—when agreement becomes binding—non-discretionary award
      • Enforceable Obligation
        • §1032  employment contract—right to benefit or right to shares—binding obligation under employment law—implicit conditions of employment
      • Substantially Complete
        • §1033  perfect or almost perfect agreement—substantially advanced stock benefit agreement, as binding obligation
      • Unwritten Agreement
        • §1034  written or verbal—formal or informal contract—unilateral or bilateral—legally-binding as gateway to documentary audit
      • Evidence For Agreement
        • §1035  evidentiary standard for award, GAAP, FASB—Internal Revenue Code, agreement in writing—option backdating in Canada—Canadian Securities Administrators notice—reporting stock option awards
      • Acceptance
        • §1036  agreement when unilateral offer, directorate past policy—formal acceptance not required according to caselaw—acceptance under financial standards—policy implications for fair market value determination under benefit deduction
      • Condition Precedent
        • §1037  true condition precedent—application under employment contract—application under stock option agreement as stand-alone contract
      • Condition Subsequent
        • §1037.1  change in control—plan fictions—disposition—interpretations—formal right—employee benefit—board powers—Transalta legacy
      • Perfunctory Discretion
        • §1038  meaningful employer discretion—condition of grant or condition of exercise—formal discretion versus actual conduct—legally-binding benefit promise
      • Board And Shareholder Approval
        • §1039  shareholder approval not required unless condition precedent for award—binding obligation if approval incomplete?—Internal Revenue Code, condition of grant or of exercise
      • Timing
        • §1040  timing for benefit in kind—when benefit received or enjoyed—stock option benefit—stock bonus benefit—agreement to confer benefit
    • Conclusion
      • Agreement As Benefit Offer
        • §1041  stock benefit as compensation—fulfilment of undertaking to provide stock benefit under employment contract—discretion as condition of exercise—Transalta limited to unexpected awards?
  • 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
      • §1046  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
      • §1047  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?
      • §1048  agreement not specific for all outcomes—legally-binding for the outcome that happens—different agreements for different outcomes
    • Specific For All Holders?
      • §1048.1  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
  • The Benefit
    • Scope
      • §1053  grantor, issuer and employer—who is the "particular qualifying person"—to whom amount paid on issue or sale
    • Qualifying Person
      • §1054  employee of partnership—qualifying corporation as corporate partner—specific employment
    • Exclusive Charge
      • §1055  agreements inside preamble—safe harbour—transfer to corporation not dealing at arm's length, no liability prior to amendment
    • Concurrent Taxation
      • §1056  scope of safe harbour—excluded property—capital gain taxation—legislative intent—complete code
    • Double Liability
      • §1056.1  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
    • Basic Rules
      • §1057  benefit inclusion—acquisition of shares—value—disposition of rights—death—attribution
    • Acquisition Of Shares Under Agreement
      • Measurement Of Benefit
        • §1058  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
        • §1059  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
        • §1060  corporate transferee not dealing at arm's length, mutual fund trust—overlap with transfer to vested person
    • Benefit Of Vested Person
      • Acquisition Of Shares
        • §1061  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
        • §1062  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
        • §1063  transfer to corporation not dealing at arm's length, transfer to vested person—subsequent transfer, exposure to double liability?
      • "A" Or "The" Particular Transferee
        • §1064  acceleration of benefit, transfer to "a" particular qualifying person—explanatory notes, transfer to employer—drafting ambiguity
    • Safe Habour For Agreement
      • Overview
        • §1065  no benefit under agreement except as stock benefit—benefits under all provisions—double benefits and escaping benefits
      • Drafting Mismatch
        • §1066  not same language as preamble of benefit provisions—the person or the qualifying person, trusts
      • Coincidental Liability
        • §1067  no deemed dividend on paid-up capital increase of shares issued as benefit—agency policies on safe harbour
    • Foreign Exchange
      • Overview
        • §1068  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
        • §1069  option award as transaction —conversion of price upon grant—stock benefit unlike capital gain—conversion of value and price at time of benefit
      • Currency Gain Or Loss
        • §1070  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
      • Meaning Of Exercise Date
        • §1071  amounts relevant to benefit—value upon acquisition—cashless exercise—acquisition before settlement date
      • Amount Payable For Shares
        • §1072  amount payable—payment by cheque—date of delivery—conversion on payment date—stipulating conditional cheque payment
      • Other Events
        • §1073  amount paid for option—value of consideration—currency gain or loss on payment
    • Benefit As Compensation
      • §1073.1  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?
  • Benefits Outside Section 7
    • General Rule
      • §1074  stock benefit—remuneration—as benefit in kind—outside legally-binding agreement—stock option as right to shares—caselaw derived from British theories
    • Benefit Upon Grant
      • §1075  option exercisable for 10 years—vested upon grant—nontransferable—majority, perquisite upon grant—minority, upon exercise
      • Realization
        • §1076  pecuniary account—majority, realisation unnecessary—capable of realisation—minority, realisation only upon exercise
      • Nature Of Right
        • §1077  interest in property—personal right—majority, right to shares—minority, expectation of shares—assignable rights
      • Source Of Benefit
        • §1078  exploitation of right—extraneous to employment—no perquisite without exercise—multiple exercises
      • Valuation
        • §1079  measurability—if perquisite on grant, no perquisite if no value—if perquisite on exercise, value at grant not relevant
      • Conditions
        • §1080  assignability—no bar to turning into money before exercise—assignable right taxable on grant—vesting condition
      • Bonus Analogy
        • §1081  option as right to perquisite—right to bonus compared—bonus paid as options—expectation of payment
      • Discount Analogy
        • §1082  commodity discount—perquisite upon commodity purchase—variable market price under discount—constant price under option
    • Benefit As Share Offer
      • Robertson, FCTD
        • §1083  offer of third-party shares to employee—expectation of benefit—benefit taxable in year of exercise—exercise during employment as uncertainty
      • Robertson FCA
        • §1084  two benefits—benefit upon grant or exercise—quantification not feasible before exercise—value after vesting as investment
    • Third-party Option
      • Henley FCTD
        • §1085  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
        • §1086  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
        • §1087  sales commission analogy—shares in lieu of commission—timing of inclusion—time of receipt or constructive receipt—share-dependent offers
      • Directorate Policy
        • §1088  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
      • §1089  benefit deemed received after employment cessation—employment deemed continued
      • Limitations
        • §1090  employment, benefit charging provisions expressly covered by deeming employment continued—other provisions subsumed?
    • Post-employment Agreement
      • §1091  employment terminated when agreement made—benefit deemed received as if employment continues
    • Pre-employment Agreement
      • §1092  prospective employee—legally-binding agreement—when employer—statutory intent—director appointment—deemed remuneration
    • Open Market Share
      • Source Of Shares
        • §1094  meaning open market—directorate policy—meaning of sale—company law—intermediary selling shares—trust holding shares
      • Qualifying Shares
        • §1095  unissued—restored as unissued—treasury—third party—open market—trusteed arrangement—eligible share categories
      • Policy Considerations
        • §1096  out-of-pocket expenses—open market share—theoretical underpinning—share expenditure—financial standard—derivatives—deduction non-qualified securities—overlap—share provenance
      • Purchase By Employer
        • §1097  employer settling option—open market shares of issuer—sale by employer—expense not deductible—shares owned or loaned
      • Purchase By Issuer
        • §1098  shares acquired by issuer—treasury shares—reimbursement by employer—cost not deductible—out-of-pocket expenses
      • Purchase By Employee Benefit Plan
        • §1099  employee benefit plan, open market shares purchased by trust—trusteed agreement, provenance-blind?—mixed provenance, employee benefit plan
      • Purchase By Employee Share Purchase Plan
        • §1100  employer contributions—receipt by employee—contribution of open market shares—contribution of treasury shares—trusteed arrangements
      • Purchase By Employees Profit Sharing Plan
        • §1101  purchase and cancellation—shares reissued by plan—no deduction—open market purchase—qualified person
      • Purchase By Bonus Plan
        • §1102  purchase by employee—open market—broker as agent—employee benefit plan—cashless exercise
      • Hedging
        • §1102.1  treasury shares as hedge—deemed acquisition by employee—open market share settlement—total return swap—financial expense
  • Benefit Upon Conversion
    • Convertibility
      • §1103  note delivered as bonus—convertibility feature—conversion as exercise of rights
    • Debenture
      • Mansfield FCTD
        • §1104  debenture convertible into shares—taxation of stock benefit upon exercise
      • Mansfield FCA
        • §1105  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
        • §1106  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
        • §1107  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 From Trust
    • Overview
      • §1108  held by a trust for sale to employee—deemed acquired under agreement with employer—priority of purchase arrangement—employees profit sharing plan—employee benefit plan
    • Purchase Arrangements
      • Arrangement
        • §1109  trustee arrangement—arrangement not necessarily a contract—open-ended meaning
      • Qualifying Entities
        • §1110  particular qualifying corporation—different persons making arrangement—issuer, grantor or employer—person or qualifying person
      • Deemed Rights Under Arrangement
        • §1111  agreement with employer—legally-binding—time of agreement—discretion
      • Deemed Events
        • §1112  shares deemed acquired under agreement—amount deemed paid for shares—benefit computed net of amount paid or to be paid
      • Foreign Exchange
        • §1113  deemed agreement—deemed acquisition—Canadian currency at exercise—no currency adjustment for benefit deduction
      • Employer Discount
        • §1114  contributory trust—discounted shares arrangement—deduction of discount—holding or purchase arrangement—right to contribution amount—arrangement as EBP—employee savings plan
    • Holding Arrangements
      • Overview
        • §1115  holding arrangements versus purchase arrangements—acquisition of shares by trust—trust holding shares for employee—deemed share acquisition
      • Comparison
        • §1116  holding and purchase arrangements—outright ownership by trust—ownership by employee—custodian not trust—open market shares—shares acquired from third parties—legally-binding
      • Different Régimes
        • §1117  régime overlap—employee benefit plan—receipt of benefit received—salary deferral arrangement—shareholder benefit—trust status on rollout
      • Trust Vehicle
        • §1118  trust holding shares in trust or otherwise—deed of trust—requirements for beneficiaries—bare trust—agent—escrow—separate taxpayer
      • Time Of Acquisition And Value
        • §1119  share acquired when held by trust—share valuation—trading restriction—trust holding share to enforce restriction
      • Cost Base Of Shares
        • §1120  amount paid to holding trust—payment not deemed made to issuer—benefit added to cost of shares—bump for trust or employee
      • Trust Distribution
        • §1121  dispositon of interest—acquisition of shares—property rollout—designation of net capital gain—personal trust—deemed relationship
      • Benefit Timing
        • §1122  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
        • §1123  shares in trust—currency fluctuation before distribution—distribution at cost amount—capital interest in trust—currency gain inherited
      • Employee Share Reallocation
        • §1124  shares for future employees—buy-sell agreement—sale at cost between employees—no contribution to trust—inadequate consideration
    • EBP
      • Primacy
        • §1125  EBP framework—primacy of holding and purchase arrangements—relationship EPSP, SDA, RCA—trust rules
      • Legally-binding Agreement
        • §1126  share held for employee—held under legally-binding agreement—shares held for sale—capital gain deduction
      • Allocated To An Employee
        • §1127  held for an employee—not held unless allocated—discretion—no interest in trust—contingent allocation—EPSP allocation—textual and historical construction
      • Plan Evolving Over Time
        • §1128  no agreement before allocation—allocation prior to distribution—QSBCS qualification—employee benefit plan—hybrid arrangement—transformation not disposition
      • Founder Shares Reallocated
        • §1129  loan to trust—shares held by trustee—nominal starting value—allocated to founder—later reallocation to other employees—benefit inclusion and deduction—trust distribution
      • McNeeley
        • §1132  founder reallocation trust—EBP or prescribed trust—technical construction—employee savings plan—prescribed trust—health and welfare trust—benefit from employment
      • Excluded Payments
        • §1133  exclusion of payments—plan providing employment income and other payments—EBP if any income item
      • Payment As Different Arrangement
        • §1134  same trust, multiple arrangements—only exclusionary payments remaining
      • Marketmaking Trust
        • Overview
          • §1134.1  employee buyco—employee incentive or ownership shares—2012 reversal—use of trust—employee benefit—marketmaking as economic benefit—acting in concert
        • Contribution
          • §1134.2  contribution to another person—contribution as payment—earmarks—guarantees—bona fide loan—buyout at overvalue—difference as contribution
        • Mechanics
          • §1134.3  cost of legal and administrative services—GAAR reviewed structures—funding alternatives—prepayment—dividend—share redemption—non-interest loan
        • Taxable Payments
          • §1134.4  any payment—exclusionary clause—other arrangements—taxable capital gain—sale proceeds
        • Holding Trust As Market Maker
          • §1134.5  primacy of agreement—holding trust—beginning or end—allocation—sale by employee
      • Plain Trust
        • §1134.6  not purchase or holding arrangement—not EBP or SDA—discretionary share offer—award when equity acquired—trust distribution—employer deduction
      • Open Market Shares
        • §1135  trust buying shares on open market—share held for employee—binding agreement to issue or sell—share provenance—treasury shares as hedge
    • EPSP
      • Framework
        • §1135.1  contribution allocated as income—capital gains—dividends—unrealized gains—withholding and reporting—rollout of appreciated property
      • Conflict With Stock Benefit
        • §1135.2  treasury shares held by EPSP—allocation—object versus means—true EPSP—statutory interpretation
      • Comparative Tax Treatment
        • §1135.3  table—holding arrangement—EBP—EPSP—personal trust—consideration payable
      • Venture Capital
        • §1135.4  manager compensation—EPSP—allocation—valuation—carried interest—option investment
      • Founder Reallocation
        • §1135.5  founder incorporation—EPSP share subscription—performance based profit allocation—asset mix—appreciation not taxable—cost amount of distributed shares
    • Forfeiture Deduction
      • Offset Of Inclusion
        • §1136  forfeit due to failure to vest—deemed disposition as time for relief—interest in share or in trust
      • Triggering Events
        • §1137  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
        • §1138  benefit inclusion reversed—capital gain or dividend taxation precluded
      • Foreign Exchange
        • §1139  benefit computed in Canadian currency—amount repaid same as amount paid—currency adjusted amount
  • Benefit Upon Death
    • Overview
      • §1140  provision introduced May 1991—right under agreement neither capital property, nor right to amount—loophole closed
    • Option Not Capital Property
      • §1141  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"
        • §1142  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
        • §1143  interest, rent, royalty, annuity, remuneration—annual bonus—share agreement or bonus agreement
      • Conflict And Primacy
        • §1144  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
      • §1145  modification of rights following death—modification as commutation, disposition—applicability of deemed disposition if right extinguished—applicability to unvested rights
    • Example: Agreement Modification
      • §1146  unvested option buyback—option ceasing to exist—cashout after death
    • Measurement Of Benefit
      • Cost Aggregation
        • §1147  deemed disposition agreement-by-agreement—option-by-option—share-by-share—cost aggregation for reduction of benefit
      • Rights Partly Paid
        • §1148  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
      • §1149  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
      • §1150  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
      • §1151  precedence for deemed disposition on death—inapplicability not extended to all other stock benefit provisions—no deeming of person as employee post-mortem
  • Bonus Or Restricted Shares
    • Share Bonus
      • §1152  pre-1980 policy on share bonus, salary bonus not subject to inclusion as stock benefit—post-1980 policy, salary bonus treated as stock benefit—post-Transalta policy, salary bonus not subject to inclusion if discretionary
    • Share Bonus Election
      • §1154  cash bonus constructively received before share bonus paid—no agreement before bonus amount determined—when binding agreement for share bonus after amount determined
    • Unissued Shares
      • §1155  beneficial ownership—later issuance—benefit when shares acquired—time of bonus—time of issuance
    • Share Or Cash Settled Bonus
      • §1156  share-settled cash bonus—share-denominated share-settled bonus—agreement to issue specific number of shares—if binding agreement, deferred shares
    • Share Bonus As Sale
      • §1157  open market shares delivered as bonus—settlor not issuer paying share bonus from sale of open market shares—shares sold by shareholder—deductibility of expense
    • Restricted Share Under Agreement
      • §1159  benefit acceleration for restricted shares—discount for trading restriction—policy, restricted share versus option—US policy for restricted shares
      • Bonus CCPC Shares
        • §1160  deferred benefit inclusion, earlier valuation—benefit deduction, two-year holding or fair market value requirements—prescribed share
      • Risk
        • §1161  risk associated with restricted shares—capital loss or business investment loss—Department of Finance, is employee an investor?—deduction for forfeited shares
    • Restricted Shares Outside Agreement
      • When Taxable
        • §1162  share as discretionary bonus—timing of benefit—acquisition of shares—lifting of share restrictions—money's worth
      • Exchanges And Dispositions
        • §1163  restricted share without agreement, benefit upon vesting—no benefit deduction—no nonrecognition for share exchanges—immigration and emigration
  • Benefit Deferral CCPC
    • Special Régime
      • §1165  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
      • §1166  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
        • §1167  CCPC at time of agreement—option conditional on going public—time of vesting not relevant for CCPC status
      • General Partner As CCPC
        • §1168  limited partnership, no stock benefit incentive—general partner as employer—eligible CCPC shares
      • Future Employee
        • §1169  issuance of rights for future employees—legally-binding agreement—shares held in trust—buy-sell
  • Benefit Outside Employment
    • General Principles
      • §1170  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
        • §1171  obligation to purchase shares under standby agreement—benefit not in respect of employment of director
      • Services Performed Qua Director
        • §1172  director as employee—option granted in capacity of director as employee or something else—director as nominee—income of corporation
      • Scott FCA, Director, Employment
        • §1173  employee of corporation other than issuer—de facto employment with issuer, director—benefit in respect of employment
    • Startup
      • Del Grande, TCC
        • §1174  option exercise in connection with loan guarantee—no shareholder benefit upon exercise—shareholder benefit versus employee benefit—valuation of options
      • Taylor
        • §1175  director as promoter—benefit as employee—benefit as business income of corporate entity
      • Going Public
        • §1176  going public—benefit as employee or shareholder—little CRA guidance—comparing stakeholders
    • Shareholder Benefit
      • Surplus Stripping
        • §1177  employee-shareholders in execution of tax avoidance scheme—benefit as shareholder not employee
      • Identical Rights
        • §1178  nonidentical rights, different cost—not employment benefit—identical rights not exercised
      • Discretionary Awards
        • §1179  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
        • §1180  right to shares awarded by entity without share capital—employment benefit, unless shares reserved for existing members, not all employees
    • Consultants
      • Overlapping Status
        • §1181  benefit inclusion and deduction for employees—consultant or employee—part-time employee or director
      • Option Inclusion
        • §1182  option as amount received or receivable—amount received for undelivered services—unearned amount prior to vesting—amount receivable—offer of shares
      • Option Value
        • §1183  option value as business income—value at grant—intrinsic value—fair market value—valuation method—international consultant
      • Barter
        • §1184  value of services—business income—barter transactions—good and services tax—record of services
      • Capital Or Income
        • §1185  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
        • §1186  share payment—amount receivable—conditionality—barter transaction—valuation—deferred share transfer
      • Service Corporation
        • §1187  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
        • §1188  grant of shares by employer corporation—benefit ordained by estate of controlling shareholder—only for employees but not in respect of employment—McNeeley
      • Busby
        • §1189  personal relationship, benefit not in respect of employment—director as employee?
      • Dundas
        • §1190  rights cancelled—not in respect of employment—breach of employment
  • Benefit Deduction
    • Introduction
      • §1191  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
      • §1192  taxpayer at arm's length with grantor, issuer, and employer—if rights exchanged, original agreement as reference point
    • Price Requirement
      • Options And Exchanged Options
        • §1193  no deduction if price less than value—no price reduction for life of option—price reduction only upon exchange
      • Opening And Closing Price
        • §1194  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
        • Overview
          • §1195  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
        • Benefit Inclusion
          • §1196  a particular agreement or agreements—average amount payable over agreements—appropriate measure of employee benefit—averaging—agreement as one or more offers
        • Option Exchanges
          • §1197  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
        • Benefit Deduction
          • §1198  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
        • §1199  series of exchanges—multiple times, agreement or disposition—qualifying exchanges, all or one or more—each of one or more
      • Vested Person
        • §1200  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
        • §1201  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
        • §1202  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
        • §1203  stock split, etc.—new option share number restated—new option share value restated
      • Currency
        • Amount Payable
          • §1204  foreign currency, time of benefit—time of agreement for amount payable—amount payable versus amount determined—amount paid for rights
        • Protection Clause
          • §1205  price guarantee—price requirement for amount payable—price increase or decrease, adjusted—incorporated to benefit
  • Prescribed Shares
    • Overview
      • §1206  prescribed share, assuming risk associated with share—"plain vanilla share"—no requirement for CCPC benefit deduction—unit of mutual fund trust excluded
    • When Determined
      • Sale Or Issue
        • §1207  time of actual sale or issue—time of fictional sale or issue rights disposed of—trusteed arrangements
      • Assumed Issuance
        • §1208  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
        • §1209  maximum or minimum—piggy-back dividend exception
      • Covenant In Loan Agreement
        • §1210  maximum or minimum in any agreement—source of limitation, company law, contract, practical constraints—adjusting purchase price—dividend subject to purchaser's consent
      • Cumulative
        • §1211  minimum cumulative preferential dividend—unpaid dividend on liquidation
    • No Liquidation Floor Or Cap
      • §1212  maximum or minimum—piggy-back liquidation exception
    • No Conversion
      • §1213  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
      • §1214  ability to cause redemption, acquisition or cancellation—for determining right, time right exercisable—subsequent holder—estate
    • No Paid-up Capital Reduction
      • §1215  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
        • §1216  redemption, acquisition or cancellation by corporation—exception for price equal to fair market value or less—overlap between definition items
      • Approximate Value
        • §1217  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
        • §1218  redemption, acquisition, cancellation, conversion—reasonably anticipated within two years—discretionary cashout—reasonable expectation for buyer or shareholder
      • Amalgamation, Winding-up, Distribution
        • §1219  reasonable expectation, exception—specific reorganization events—distribution without dividend
      • Conversion And Reorganization Of Capital
        • §1220  reasonable expectation, exception—only prescribed share consideration—allocation of other consideration in rollover
    • No Reasonable Expectation Of Amendment
      • §1221  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
      • §1222  exchange of prescribed share, reasonable expectation—exchange of CCPC share deemed not to happen—fiction relevant to reasonable expectation?
  • Election By Employer To Forego Deduction
    • Policy
      • §1223  compliant agreement—deductibility—benefit deduction upon acquisition of security—election to forego employer deduction—symmetrical policies
    • Requirements
      • §1224  election in prescribed form—evidence of election provided to taxpayer and produced with income tax return—T4 as evidence
    • Grantor, Not Employer
      • §1225  election by grantor—T4 filed by employer or payor, not necessarily grantor
    • Scope Of Election
      • §1226  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
      • §1227  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
      • §1228  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
      • §1229  time for evaluating relationship with particular qualifying corporation—time of agreement, payment, election or deduction
    • Vested Person
      • §1230  disposition by vested person—benefit deemed received by employee—no payment to employee
    • Net Share Settlement
      • §1231  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
      • §1232  renouncing nondeductible amounts—deduction for non-qualified securities—deduction under foreign legislation
  • Deferred Compensation
    • Basic Concepts
      • §1233  receipt, constructive receipt—deferred compensation and future compensation—promise to pay plans
    • Constructive Receipt
      • Overview
        • §1234  continuum from earning to payment—amount declared, paid, payable, owing, available for payment—amount as good as paid
      • Doctrine
        • §1235  limited judicial recognition—no application to bonus declared unpaid and payment to trust—US codified doctrine
      • Agency Core Policy
        • §1236  employee's account—no restriction on use—if conditions, amount not received—benefit enjoyed by taxpayer or another person—state of caselaw
      • Agency Statements
        • §1237  constructive receipt, multiple agency references in employment context—bulletins—rulings—little caselaw supporting or dismissing agency position—allocation of property as constructive receipt
      • Salary Deferral Arrangements
        • §1238  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
    • Salary Deferral Arrangement
      • Statutory Scheme
        • §1239  inclusion of deferred amount—inclusion of amount received—employer deduction—employee forfeit—hybrid plans
      • Policy
        • §1240  right to amount—evidence of receipt—determined amount—accrual amount—earned or otherwise received—multiyear award distinguished—no judicial guidance
      • Deferred Amount
        • §1241  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
        • §1243  any right in the year—right to amount—legally-binding—undetermined amount—no salary deferral
      • Contingent Beneficiary
        • §1244  contingent right—amount as right to income—annual applicability—discretionary trust—forfeit risk—GAAR
      • Postponement Purpose
        • §1245  main purposes—several main purposes—purpose of taxpayer or employer—purpose of individual employee—salary or wages—tax payable
      • Substantial Risk
        • §1246  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
        • §1247  condition disregarded unless substantial risk—explanatory notes—employment condition—Treasury regulation—
      • Accumulating Metrics
        • §1248  incentives for long-term goals—defining the earning period—conditions for the awards of earnings—deferral period earnings—uncertainty
      • Excluded Arrangements
        • §1249  pension plans, profit sharing plans, employee trusts, etc.—bonus plans and end of employment plans—deferred salary leave plans
    • Section 7 Rights
      • Overview
        • §1250  share-dependent award—statutory—judicial extension—right to share settlement—promise to pay amount—policy substance
      • Safe Harbour For Deferred Compensation
        • §1251  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
        • §1252  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
        • §1253  initial value—entitlement—consideration—settlement—maturity—type of incentive—as SDA exception, RSU and DSU—benefit in kind—reporting standard
      • Value At Outset
        • §1254  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
        • §1255  phantom shares—future services, not deferred salary—salary deferred if right exercisable
      • Accrual Basis For Plans
        • §1256  appreciation plans—starting value as deferred amount—annual increase as deferred amount—tax postponement as annual test—limited exception ATR-45
      • ATR-45 Plan
        • §1257  nil starting value—conditions for exception—basis for exception modified—share manipulation—deprecation of previous statements
      • PARs
        • §1258  performance appreciation rights—appreciation computed by reference to earnings—metric tied to business unit—partnerships—no rulings for formula plans
      • Initial Value Misleading
        • §1259  starting value as measure of deferral—present value of appreciation right—correct measure of deferral—cash basis
      • Accrual As Deferred Amount
        • §1260  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
        • §1261  trusteed plan—no inclusion of accrual—no inclusion of variation in value—deferred amount definition—funded versus unfunded plan
      • Deferred Payment
        • §1262  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
        • §1263  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
        • §1264  payout as multiplication of initial award—payout based on stock performance metric, not SDA—starting value as deferral indicator
      • Exchange For Other Rights
        • §1265  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
  • DSU
    • Typical Plans
      • Overview
        • §1266  end of employment plan conditions—employment—beneficiary—contract parties—maturity—share dependence—at risk
    • DSU Typical Plans
      • Officer Bonus Plan
        • §1267  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
        • §1268  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
        • §1269  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
        • §1270  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
        • §1271  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
        • §1272  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
        • §1273  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
    • Tracking Shares
      • Derivatively Dependent Shares
        • §1274  plan benefits dependent on employer share value—shares of any class—share value derived from other entity
      • Loan Collateral
        • §1275  loan arrangements—deferred compensation—borrowing against the value of share-dependent unit—reduce risk, align with business strategy
      • Funded Subsidiary
        • §1276  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
        • §1277  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
        • §1278  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
        • §1279  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
        • §1280  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
        • §1281  value for payout, allocation and dividends—"depends" on value—directorate policy, equal to fair market value—several value measures accepted for listed shares
      • Downward Fluctuation
        • §1282  no value reduction offset—sponsor undertaking not to grant offsetting units—reorganizations, exchanges, unit allocation, as offsetting events
      • Timing And Other Factors
        • §1283  reducing of impact by timing—tracking shares not exposed to reduction—retirement benefit linked to DSU plan
    • End Of Employment
      • Retiring Allowances Policy
        • §1284  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
        • §1285  termination with employer or affiliate—loss of affiliate status—director and employee—employment at law
  • Share-based Dividend Equivalents
    • Overview
      • §1286  dividends on notional shares—settlement as cash or unit entitlement—SAR, DSU and RSU
    • Rulings Policy
      • §1287  credit of dividend equivalent units, no income inclusion—no disqualification of otherwise compliant arrangement—blanket and more limited rulings
    • Severability Of Features
      • §1288  dividend as separate right—as its own arrangement?—as component of investment return promise—dividend-equivalent units comprised in original deferral
    • RSUs
      • §1289  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
      • §1290  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
      • §1291  forward appreciation unit—dividend equivalent on units settled in cash before maturity—future compensation or deferred compensation?—not separate hybrid arrangement
    • Section 7 Agreements
      • §1292  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
  • Bonus Deferral
    • Overview
      • §1293  bonus "to be paid" within 3 years—two different periods referenced by ruling policy—employer period test—employee period test
    • Variable Salary
      • §1294  bonus as extra amount, not just variable—extra as discretionary award
    • Single Year Services
      • §1295  bonus for services in several taxation years, ineligible—multiyear bonus as future compensation
    • SAR Services
      • §1296  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
      • §1297  multiyear metric—3-year exception—services in deferral period—annual bonus—multiyear metric
    • Postponement Period Services
      • §1298  units as bonus—bonus as comprising appreciation—conditions for deferral involving services—multiyear services—whole term appreciation
    • "To Be Paid" Within 3 Years
      • §1299  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
      • §1300  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
      • §1301  bonus paid in units—units with different redemption terms—latest term beyond 3-year deferral—structuring bonus as 3 awards
    • Bonus Paid After Retirement
      • §1302  salary or wages—not pension or retiring allowance
    • Investment Contract
      • §1303  units based on leveraged investment contract—accrual not interest
  • Supplementary Pension
    • SDA And RCA Compared
      • Two Amounts
        • §1304  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
        • §1305  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
        • §1306  RCA treated as SDA—current salary or bonus traded for retirement benefit
      • Not Salary Or Wages
        • §1307  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
        • §1308  RCA treated as SDA if benefit not reasonable—comparison to RPP, contribution rate—electing a compensation mix—technical requirement of salary deferral
      • Anti-avoidance
        • §1309  policy as unproven presumption—RCA tax avoidance schemes, treated as SDA—special tax
    • Settlement
      • §1310  in lieu of pension payments reported as employment income—settlement recognized as pension
  • Other Deferrals
    • Retiring Allowance With SDA
      • Intersection
        • §1311  retiring allowance, defined—salary or wages postponed for retiring allowance
    • Retiring Allowance
      • Instalments
        • §1312  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
        • §1313  not EBP if SDA—EBP benefit deferred until paid
      • Investment Plan
        • §1314  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
        • §1315  funded share bonus plan, SDA exception plan—EBP, neither SDA nor RCA
    • Leave And Overtime
      • §1316  deferred vacation leave—accumulated overtime——overtime not bonus—unused sick leave credit
  • Non-resident Benefit
    • Statutory Scheme
      • §1317  benefit deferred—employment continued as fiction—connecting benefit to source—treaty and statutory conditions
    • Computation Of Taxable Income
      • §1318  Division B income—Division D income—treaty income
    • Employment
      • §1319  meaning of employment—meaning of employed—person deemed employee and employment deemed to continue—limitation of deeming provisions
    • Income Earned In Canada
      • §1320  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
        • §1321  award of option as source—once source established, entire deemed benefit connected—no explicit support in language of provision
      • Apportionment Of Compensation
        • §1322  income earned as received—apportionment of compensation, not income—connection theories unsanctioned
    • Employment Connection
      • Hurd
        • §1323  statement of facts—three judgments, benefit taxable in Canada—no apportionment
      • Hurd V MNR, TRB
        • §1324  wholly taxable in year of deemed receipt—no apportionment—option vested during employment in Canada
      • Hurd FCTD
        • §1325  wholly taxable in year of deemed receipt—employment in Canada deemed to continue
      • Hurd FCA
        • §1326  wholly taxable in year of deemed receipt—actual employment required in Canada—employment deemed continued if earlier employment is source
      • Hurd FCA, Dissenting Reasons
        • §1327  benefit not income from employment—no fictional employment in Canada—innate income, not income as defined by Act
      • Hale FCA
        • §1328  wholly taxable in year of deemed receipt—employment deemed still in existence—employment deemed exercised under treaty
      • Mullen, TCC
        • §1329  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
        • §1330  stock benefit as "benefit of any kind whatever"—not necessarily remuneration
      • Treaty Definition
        • §1331  salary or wages defined under Act—same definition for tax treaty—stock benefit as salary or wages
      • Fixed, Periodic Payment
        • §1332  stock benefit not fixed—as lump-sum not periodic
      • Remuneration, French And English Terminology
        • §1333  remunération understood as compensation—modern usage inclusive—OECD terminology
      • International Acceptance
        • §1334  dependent services treaty provisions, scope defined by "salary or wage"—definition of remuneration unnecessary—deemed income, deemed employment, no apportionment
      • Technical Priority
        • §1335  exclusive basis for stock benefit liability for non-resident—employment in Canada
    • CRA Option Methodology
      • CRA Policy, Prior To 2012 Apportionment
        • §1336  apportionment based on employment in Canada in year of grant—compelling evidence required for allocation to vesting period
      • Reaction To Hurd
        • §1337  apportionment—year of grant unless otherwise established—generic basis and territorial basis for apportionment
      • CRA New Position, 2012
        • §1338  apportionment for foreign source income—days of employment in country—OECD method—foreign tax credit—stock option source fictions
      • Formula
        • §1339  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
        • §1340  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
        • §1341  in-the-money allocation to grant year—appreciation allocated to vesting period—benefits subject to hybrid method—stock option benefits with starting value
      • Example
        • §1342  restricted shares—immigration—deemed benefit under agreement—basis for foreign tax credit
      • CRA Assumptions
        • §1343  when employment income is earned—initial value apportionment—vesting period allocation—directorate policy evolution—theoretically neutral assumption
      • Repudiation Of OECD?
        • §1344  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
        • §1345  evolving financial and tax standards—vesting condition under financial standard—vesting as employment condition
      • Fact-based Determination
        • §1346  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
        • §1347  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
        • §1348  lump-sum payment apportioned to source country—stock option settlement after termination, same apportionment as before
      • Damages, Cancellation Of Stock Options
        • §1349  settlement for surrender of stock options—damages taxed in source state—damages treated as employment income under treaty
      • Benefit Characterization
        • §1350  OECD method blind to benefit characterization under national law—gain treated as employment income or vice versa
      • Sourcing Benefit
        • §1351  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
        • §1352  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
        • §1353  stock option as reward for services between grant and vesting—assumption rebutted by relevant facts—vesting versus grant to vesting period
      • Future Services Presumption
        • §1354  no apportionment to services during vesting period—future services presumption
      • Example: CCPC Shares
        • §1355  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
        • §1356  awards for past performance—award as supplement to prior remuneration
      • Blocking And Forfeiture
        • §1357  earned but not exercisable, treat as vested—earned but forfeitable, treat as vested—not earned before exercise, treat as unvested
      • Circumstantial Service
        • §1358  grant to reward change in job or job location—treat as vested when job performed
      • Restricted Shares
        • §1359  restriction on shares, treat as vesting condition—gain on shares as employment income
      • Conditions Altering Vesting Period
        • §1360  accelerated term, treat as vested—extended term, treat as vested
      • Employment With Group
        • §1361  employment with different employers, treat as vested—group status under Canadian provisions—vesting contractual terms
      • Method Limitations
        • §1362  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
        • §1363  same year tax, foreign tax credit—taxable event mismatches
    • 183-day Requirement
      • General Rule
        • §1364  not more than 183 days—employer not resident—not borne by permanent establishment—remuneration as apportioned
      • Annual Reference Points
        • §1365  taxation year of benefit or credit—taxation year of employment—taxation year of presence—example
      • Days Of Residence
        • §1366  days of presence in source state—omission of days during period of residence
      • Example: Days Of Employment During Residence
        • §1367  days of presence non-resident excluded—residence status, reference year
      • Fiscal Year Concerned
        • §1368  different reference years—source state year, OECD preference
      • OECD 1991 Report, Days Of Presence
        • §1369  days of physical presence, not days performing activity—list of days establishing presence—holidays—Canadian policy, 1991
      • OECD Commentary, Days Of Presence
        • §1370  days of presence, not only work days—days connected with employment including coinciding holidays
      • Example #1: No Apportionment Without Necessary Presence
        • §1371  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
        • §1372  counting days of presence—apportionment period, days for vesting—183-day requirement, all days
      • Example #3: Days Of Presence During Period Of Residence
        • §1373  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
        • §1374  no presence minimum if remuneration paid by employer resident in source country—payment by employer, not grantor or issuer
      • Not Borne By Permanent Establishment
        • §1375  no presence minimum if remuneration borne by permanent establishment of employer resident in source country—cost assumed or reimbursed—item-by-item determination
      • Deductibility
        • §1376  borne by permanent establishment—stock benefit deductibility in Canada—chargeable expense, not necessarily deductible—deductible when?
    • Director's Stock Benefit
      • §1377  benefit taxable in state of company's residence—benefit after exercise treated as gain
    • Timing Of Relief Claims
      • §1378  timing mismatches—reassessment—competent authority procedure—notice of objection
  • US Treaty Benefit
    • Remuneration
      • §1379  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
      • §1380  remuneration derived from option—benefit from realization of option or shares
    • Relief Based On Benefit Apportionment
      • §1381  basis for apportionment, principal place of employment—grant-to-exercise period—exception for past service
    • Employer Or Related Entity
      • §1382  entity as individual, corporation, trust, partnership—relief not limited to benefit under legally-binding agreement
    • Taxing Authority
      • Benefit Taxed In Residence State
        • §1383  no restriction on taxing authority of residence state—taxation of benefits earned outside but deemed received by resident
      • Residence State Obliged To Provide Credit
        • §1384  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
        • §1385  principal place of business—grant-to-exercise period—period-by-period determination versus day-by-day
      • Place Of Reporting
        • §1386  place of principal employment, where employee reports—interprovincial allocation criteria—duration of employment at the place
      • CRA Interpretation
        • §1387  CRA workday method, principal place of work day-by-day—principal place for period or periods?—day count for certification
      • US Internal Revenue Code
        • §1388  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
        • §1389  constant method under Division D for all taxpayers—variable method as required under treaty
      • Treaty And OECD Method, Difference
        • §1390  apportionment—principal place of employment—no common definition of income—post-exercise gains as employment income under Treaty
    • Source Limitations
      • Overview
        • §1391  $10,000 of remuneration from source state—more than 183-days of presence in source state—differences with OECD method
      • Threshold For Apportioned Years
        • §1392  year of benefit not necessarily threshold year—threshold year as apportionment year
    • $10,000 Or Less Threshold
      • Year Reference
        • §1393  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
        • §1394  option granted to Canadian resident—employment exercised partly in the US—benefit inclusion in Canada—gain on disposal of shares in the US
        • §1395  allocation of taxing rights—resident state and source state—no common base of tax liability
        • §1396  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
        • §1397  days of presence, definition—part of day—excludes days during which resident
      • Apportioned Year
        • §1398  presence in 12-month period—no apportionment of benefit to fiscal year without presence
    • Payment By Resident
      • Overview
        • §1399  paid by any resident person—independent service contracts—disguised employment
      • How Stock Benefit Is Paid
        • §1400  benefit conferred under option as payment—benefit deemed remuneration paid as bonus—employer as any person making payment
      • Actual Payment By Employer
        • §1401  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
        • §1402  employer as matter of law—resident payor, not resident employer
      • Notional Payment
        • §1403  payment of remuneration—not payment for fiscal year concerned—paid in year apportioned?
    • Borne By Permanent Establishment
      • Remuneration Deductible
        • §1404  remuneration charged to permanent establishment—"borne by" means deductible—deductibility, stock benefits
      • Benefit As Distinct Source
        • §1405  item-by-item determination—deductible items taxable in source state unlike nondeductible items
  • Withholding And Reporting
    • Overview
      • Basic Rules, Income Tax, EI And CPP
        • §1406  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
        • §1407  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
        • §1408  employer election, cashout—filing election, T4 code 86
    • Withholding
      • Statutory Basis
        • §1409  income tax basis for withholding—deemed benefits as paid bonus—deemed paid or actually paid—consultants—professional employer organization—foreign payor
      • Actual Payments
        • §1410  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
        • §1411  salary or wages equated to income—withholding for remuneration not restricted to income—nonincome stock benefit, paid as remuneration, technical exposure
      • Fees, Commissions
        • §1411.1  fees for service—option grant—option vesting—option exercise—compliance survey
    • Remuneration Paid As A Bonus
      • Double Deeming
        • §1412  withholding for bonus—amount withheld deemed paid—double liability—vested person as payee
      • CCPC Shares
        • §1413  no withholding for CCPC benefit—benefit on disposition of CCPC share, not on exchange
    • Withholding Waivers
      • Overview
        • §1414  waiver of withholding—no waiver for non-cash—transitional measure—directors liability
      • Hardship
        • §1415  hardship formerly acknowledged for non-cash benefit—hardship still recognized for reasons other than non-cash
      • No Other Remuneration
        • §1416  no waiver even if no other cash remuneration—pay period
    • Employee Benefit Plan
      • §1417  benefits under EBP—reporting, trust as employer—no EI nor CPP—other plans—retiring allowances—withholding if benefit non-cash?
    • Trusteed Arrangements
      • §1418  trust arrangement for sale of shares to employees—employer not trust regarded by agency as payor subject to withholding obligation
    • Cashless Exercise
      • Mechanics
        • §1419  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
        • §1420  value of shares, benefit—time of acquisition or time of short sale settlement—shares must be acquired and paid by employee
    • Net Settlement
      • §1421  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
      • §1422  acceleration of vesting—loan, exercise and sale of shares to Buyco—sale of rights to Buyco—withholding against proceeds
    • Recovery
      • §1423  guarantee for unpaid loan—no exercise until loan paid—employee termination—ascertaining exact withholding amount
    • Non-residents
      • Obligation To Withhold
        • §1424  employer or payor—taxpayer not subject to tax—taxpayer exempt from tax under treaty—refund on tax return filing—international law
      • Non-resident Exemptions
        • §1424.1  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
        • §1424.2  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
          • §1425  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
          • §1426  employer as obligee—reimbursement as indicator of employer status—secondment, contract for services
        • Non-resident Payor
          • §1427  non-resident making grant of option to resident employee—withholding and reporting as non-resident payor—reimbursement by employer
    • Treaty Exempt Employees
      • Waivers
        • §1428  non-resident waivers—waiver, remuneration—employer certified waiver—waiver, payment for services—year of payment
      • Employer Specific Waiver
        • §1429  employer certification, treaty exempt—qualifying non-resident employees—employee losing qualification
      • Employee Specific Waiver
        • §1430  employee providing services in Canada—employed by non-certified employer—employed by certified employer but not qualifying employee
    • Independent Contractors
      • Stock Benefit
        • §1431  stock benefit for contractor—withholding on actual payment—subsidiary as contractor—non-resident employee not rendering services in Canada
• II. REORGANIZATION AND MONETIZATION §2000 - §2432
  • Direct Exit
    • Tax Outcomes
      • §2000  exit by employee—benefit deduction—redemption of shares—double tax—sale of shares—option settlement—comparative tax—optimum extraction
    • Offsetting Discount
      • §2000.1  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
      • §2000.2  equity stake—net settlement—option exchange—sale of option right
    • Extant Options
      • §2000.3  option cancellation—death retirement, termination—control change—no prescribed condition for option—option dividend-equivalent—option price averaging
  • Tracking Shares
    • Family Office
      • Overview
        • §2001  advisor compensation—carried interest—corporate shares—partnership—tax risks
      • Business Income Uncertainties
        • §2001.1  investment funds—compensation template—carried interest—common international approach—Canadian exception—policy insufficiency—assessing policies wanting
      • Employment Income Uncertainties
        • §2001.2  key person—performance incentive—interest as employment benefit—shares in lieu of interest—USA and UK concessions—Canadian tax risks
      • Excise Tax Uncertainties
        • §2001.3  investment funds—excise tax—EU UK USA—Canadian tax risks—exempt supply GST
      • Proposed Structure
        • §2001.4  trading and investment entities—salary and carry—tracking shares—assumptions
      • Structuring Tracking Shares
        • §2001.5  tracking share use—carry simulation—special clauses—after tax return—no employment benefit—no GST exposure
      • Structuring Business
        • §2001.6  investment and trading subsidiaries—tainting investments—capital gains deduction—prescribed share—variant
      • Structuring Advisor Compensation
        • §2001.7  advisor carry as fee—compared to tracking share—fee not commission—GST on fee—net return
      • Structuring Redemption Investment Subsidiary
        • §2001.8  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
        • §2001.9  tracking shares—full carry not earned—tax-paid entitlement—versus partnership carry—intercorporate dividend—butterfly
  • Benefit Attribution
    • Introduction
      • §2002  general rules—benefit of vested person treated as benefit of employee—no deferral for CCPC shares
    • Rights Becoming Vested
      • Property Rights
        • §2002.1  becoming vested in person—vesting as transfer of ownership—vesting for property rights, not fulfillment of employment conditions
      • Conditions Attached To Share-based Compensation
        • §2003  vesting condition—time for exercise of vested option—restricted shares—accelerated awards—shareholder agreement—vesting subject to forfeit—clawback
      • Vesting Indefeasibly
        • §2004  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
        • §2005  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
        • §2006  partnership and joint venture—foreign entity—partnership or partner as person vested—attribution and partnership allocation—double liability
      • Employee, Partners And Partnerships
        • §2007  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
        • §2008  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
        • §2009  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"
        • §2010  transaction as opération—Dufresne, widest possible sense—etymology—transaction same in English and French current usage—drafters' persistence with opération
      • Transaction As Arrangement
        • §2011  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
        • §2012  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
        • §2013  transmission upon death as transaction?—transmission upon death as transaction "between" persons—other involuntary transfers—death as event, not transaction
      • Plan Reallocation Upon Death
        • §2014  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
        • §2015  imputation of income from trust not transaction—deemed disposition as transaction—application of 21-year rule to vested person
      • Transaction As Guarantee
        • §2016  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
        • §2017  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
      • Time Of Relations
        • §2018  when not dealing at arm’s length is evaluated—CCPC status determined at time of agreement—by analogy, time of transaction, what if multiple transactions?
      • Only At Each Transaction
        • §2019  chain of transactions—attribution if non arm's length at each link—cost case adjustment
      • At Each And At The Taxable Event
        • §2020  chain of transactions—non arm's length at each link and between first and last link—leakage from code of benefits
      • Death Of Employee
        • §2021  relationship between decedent employee's estate and beneficiaries—no deeming without coexistence?—no benefit if relationship must persist at time of taxable event
      • Benefit Deduction
        • §2022  vested person acquiring security—benefit deduction for taxpayer—non arm's length relationship with taxpayer—when determined—vested person as taxpayer after employee's death
    • Death Of The Taxpayer
      • Deemed Benefit Of Vested Person
        • §2023  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
        • §2024  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
        • §2025  corporation vested in rights—benefit as income from the duties of employment—Form 5013-SA—source withholding?
  • Option Transfers
    • Safe Harbour
      • Transfer
        • §2026  transfer by employee to holding company—benefit on transfer not taxable—reversion
      • Capital Gain Liability
        • §2027  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
        • §2028  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
        • §2029  exchange of options—relief—inapplicable to vested person—capital gain for vested person on exchange
      • Shares Basis
        • §2031  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
        • §2032  cost of share acquired pursuant to option—benefit addition—option cost unrecognized—agreement disqualified—actual cost recognized
      • Net Share Settlement
        • §2033  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
        • §2034  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
        • §2035  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
        • §2036  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
        • §2037  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
        • §2038  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
        • §2039  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
        • §2040  same outcome if benefit realized individually or by holding corporation
      • Example #3: Extracting Option Value Using A Holding Corporation
        • §2040.1  fair market value—intrinsic value—CCPC share deferral—assignability of rights—surplus stripping—loan by employer
        • §2040.2  transfer value—intrinsic or fair market value—no benefit for transferor—attribution of benefit on share acquisition—benefit deduction—loan funding—interest deductibility
        • §2040.3  corporate level tax—option premium extraction—safe income—net after personal tax—net consolidated tax—connected corporation
        • §2040.4  consolidated outcome—after-tax—before distribution—after distribution—outcome as percentage of share appreciation
  • CCPC Share Dispositions
    • Common Meaning
      • §2041  inclusion of deferred amount, share disposition or exchange—share exchange, definition—when distinct from share disposition—cancellation as disposition—merger or combination
    • Corporate Law
      • §2042  exchange of shares—low paid-up capital exchanges—conversions—changes—corporate and tax definitions unaligned—exchange that is not disposition
    • Rollovers
      • §2043  deferred share as capital property—convertible share, exchange—transfers and reorganizations, disposition on exchange—stock dividend, not substituted property
    • Voting Rights
      • §2044  exchange voting shares for non-voting—exchange as disposition
    • De Facto Control
      • §2045  voting to non-voting, no change in voting control—modification not disposition—change not exchange?
    • Common For Common And Preferred
      • §2046  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
      • §2047  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
      • §2048  no deemed disposition under subdivision a—disposition upon cancellation—allowable business investment loss
    • Synthetic Dispositions
      • §2049  short sale, not disposition—introduction of synthetic dispositions—price guarantee as disposition
    • Foreign Exchange
      • §2063  capital gain on sale—currency conversion, time of sale—cost base adjustment—paid-up capital—currency conversion, time of redemption
  • Paid-up Capital
    • Overview
      • §2050  corporate law—value of past services—full payment—fair equivalent of money—Delaware—ABA Model—return of capital—tax limitations
    • Consideration
      • §2050.1  consideration as measure of cost—as measure of state capital—two-way consideration—consideration for shares—employee award misstatement
    • Option Shares
      • §2050.2  option as prior commitment—consideration for option shares—conditions under agreement—past services during vesting period
    • Bonus Shares
      • §2050.4  share bonus—deferred payment—amount of bonus at grant—post-grant services—value of right to shares—board judgment
    • Deferred Compensation
      • §2050.5  bonus deferral plan—end-of-employment plan—credit of bonus—share entitlement—compensation liability—consideration for past services—deemed dividend
    • Future Services
      • §2050.6  signing award—consultant—employee—past or future services—commitment—intellectual rights—board determination—unpaid shares
    • Grantor Shares
      • §2050.7  three-party agreement—grantor neither issuer nor employer—shares paid in cash—deduction denied—recharge
    • Recharge
      • §2050.8  consideration—amount owing for share—not consideration from issuee—past services—deductibility—share expenditure
    • Board Determination
      • §2050.9  pre-approval of shares—validation of assumptions—board delegation—share versus option
    • Deemed Dividend
      • §2051  asset/liability balance—self-cancelling—past services—liability for bonus—liability under option
    • Amount Paid
      • §2051.1  benefit computation—amount payable for shares—exclusive of untaxed services—tax-paid amount
    • Double Liability
      • §2051.2  deemed dividend, purchase or cancellation CCPC shares—benefit and dividend with capital loss offset—double tax relief inapplicable—stock benefit safe harbour?
    • Policy
      • §2052  paid-up capital—materiality—elusiveness—no corporate sanction—subsidiarity
    • Convertible Instrument
      • Overview
        • §2053  stated capital—shares used as payment—corporate safeguards—income tax rules—return of capital
      • Agnico-Eagle Mines, Facts
        • §2055  repayment in shares—repayment as discharge of debt amount—repayment as share subscription—repayment as share value
      • Agnico-Eagle Mines, Reasons
        • §2056  Canadian tax results—company law precedent—consideration received—consideration paid—economic substance—one-way consideration—two-way consideration—timing
      • Employment Award
        • §2057  stated capital—interpretation of debenture terms—time factor—consideration received—consideration given up—conditional options—additional consideration
      • Founder Debentures
        • §2057.1  founder loan—legally-binding agreement—past services as consideration—high puc shares—reduction of capital—freeze—indefinite benefit deferral
      • Directorate Policy
        • §2057.2  share payment, determination of cost—consideration agreed by parties—asymmetry, stated capital less than value
  • Selling Deferred Shares
    • Ordering Scheme
      • Overview
        • §2064  ordering of dispositions—first in first out—deferral shares last
      • Technical Wording
        • §2065  shorthand description of benefit deferral provision—election required for DPSP shares—shares acquired or held
      • Identical Properties
        • §2066  definition, same inherent qualities—escrow shares exception
      • Averaging
        • §2067  averaging for identical properties—deferred shares not identical properties—default cost method
      • Scope Of Ordering Rules
        • §2068  capital gain, benefit deduction, deferred benefit—ordering for shares disposed—no ordering for deferred shares exchanged
      • Rules For Regular And Deferral Shares
        • §2069  first in first out—deferral shares before regular—deferral shares by time of agreement
      • Example, Regular And Deferral Shares
        • §2070  regular shares disposed of first, average cost—deferral shares disposed of last, benefit deferred
    • Identification
      • Technical Requirements
        • §2071  designation requirements—acquisition, disposition and designation—31-day window—security not designated twice—RSU partial sale
      • Two Or Dispositions
        • §2072  designations in 31-day window—when evaluated—time of disposition, filing, window close—nonidentical on subsequent disposition
      • Designation Prior 2001
        • §2073  previous CRA concession for designation—designation for cost base adjustment, not for cost averaging
      • Example: Averaging Before And After 2001 Amendments
        • §2074  averaging of cost and cost adjustment—designation cost adjustment—designation without averaging
      • Example: Subsection 7(1.31) Designation On Subsection 7(1.5) Exchange
        • §2075  designation for exchanged shares—disposition deemed not to happen on exchange—disposition required for designation—identical properties
      • Designation By Estate
        • §2076  CRA concession for post-mortem election—qualifying agreement for representative?
      • Procedure For Filing
        • §2077  no prescribed form—filing with tax return
    • Segregation
      • Legitimacy
        • §2078  prior policy—statutory identification—policy change—acceptable planning
      • Transfer To Trust
        • §2078.1  cost averaging—personal trust transfer—attribution of benefit—adjusted cost base of shares—superficial loss
      • Transfer Of CCPC Shares
        • §2079  option held by trust—alter ego trust—reacquisition from trust—CCPC benefit deferral and deduction—safe harbour—trust rollout
      • Transfer To Spouse
        • §2080  high and low cost—attribution of benefit to employee—attribution of gain to transferor—capital gain splitting with spouse
  • Drawing Liquidity
    • Comparing Alternative Sources For Cash
      • §2081  typical large employer array of compensation programs—extracting funds from plans—tax cost versus financial opportunity
    • Example: Plans From Which Funds Drawn
      • §2082  assumptions, stock bonus plan shares
      • §2083  assumptions, discount stock purchase plan
      • §2084  assumptions, stock option incentive plan
    • Example: Net Funds Required By Taxpayer
      • §2085  realization, share sale alternative, tax values
      • §2086  realization, share sale alternative, tax and net cash
      • §2087  realization, option cashless exercise alternative
      • §2088  realization, option cashless exercise alternative
      • §2089  realization, option cashless exercise alternative, no specific identification filing
    • Example: Comparison Equity Position
      • §2090  realization, share sale and option cashless exercise alternatives compared—opportunity cost of reduced equity ownership
  • Price Changes
    • Price Requirement
      • §2091  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
        • §2092  price change allowed upon exchange subject to net value requirement
      • Example #1: Initial Option
        • §2093  price reduction allowed for closing price equal or greater than grant fair market value
      • Example #1: First New Option
        • §2094  opening price equal to or greater than closing price—no price constraint on exchange outside net value requirement
      • Example #1: Final Option
        • §2095  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
        • §2096  net value requirement—reduction in value allowed—
      • Example #2: Top-up Option And Termination Settleemnt
        • §2097  disposition of rights, termination—computation of benefit
      • Example #2: Eligibility For Benefit Deduction
        • §2098  benefit deduction denied for underwater option
      • Example #2: Same Price For Exchanged Options, Neither First Nor Last
        • §2099  closing amount payable equal to or greater than opening amount payable
      • Example #2: Same Price For Last Exchanged Option
        • §2100  closing amount not greater than opening amount on final option
      • Example #2: Price Under Original Agreement Before Repricing
        • §2101  opening price of original option less than fair market value plus cost of option—exchange cannot remedy offside original price—agreement variation
  • Prescribed Share Acquisitions
    • Safe Harbour
      • Overview
        • §2102  disqualifying right or obligation—evaluating requirements without reference—qualifying purposes—arm's length
      • Loss Protection Purpose
        • §2103  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
        • §2104  market-making, fair market value as maximum—market-making, concurrent or dual purposes—co-equal principal purposes
      • Profit Conditions
        • §2105  payout not determined by apportioned period profits—loss protection and market-making payouts—profits as part of value formula
      • Reasonable Expectation Of Buyout
        • §2106  reasonable expectation as additional requirement—applicable to compliant or safe-harboured right or obligation—safe harbour for reasonable expectation
    • Montminy
      • Facts
        • §2107  amendment of option—option exercised in anticipation of asset purchase—sale of shares to holding—benefit deduction on exercise—prescribed share determination
      • Agreement
        • §2108  right to sell share non-compliant but safe-harboured
      • Disagreement Between Courts
        • §2109  reasonable expectation disqualification, rejected on appeal
      • Appellate Reasons
        • §2110  no disqualification if right safe-harboured
    • Policy Inconsistencies
      • Listed And Unlisted Shares, Options
        • §2111  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
        • §2112  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
        • §2113  exception applicable irrespective of safe harbour—exceptions involving right or obligation—exception overriding disqualification for right or obligation?
    • Options Surrendered
      • §2114  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
      • §2115  option exercised in anticipation of takeover—no put or call—disqualification for reasonable expectation—no safe harbour unless right or obligation
    • Going Private
      • §2116  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
      • §2117  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
        • §2118  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
        • §2119  not dealing at arm's length with issuer—member of partnership—beneficiary of trust—timing
      • All Or Substantially All
        • §2120  ninety percent thresshold—court discretion—administrative starting point
      • Types Of Acquisition
        • §2121  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
        • §2122  acquisition not by way of offer—when acquisition by way of arrangement
      • Arrangement
        • §2123  arrangement accepted as offer—acquisition of all of shares of target
      • Triangular Amalgamation
        • §2124  not offer for shares, where shares disappear—not dealing at arm's length as a matter of fact
      • Arm's Length
        • §2125  not at arm's lenght—existing business relationships—parties bound to transaction
  • Prescribed Share Swaps
    • Swap
      • §2126  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
      • §2127  attestation of share ownership—no share given up—net share, net of tax settlement
      • Rulings
        • §2128  attestation not disposition—net share settlement—adjusted cost base bump
      • Example
        • §2129  swap method, compared to payment of share price—ownership position compared—tax cost compared
    • Reload Option
      • §2130  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
      • §2131  offside provisions for Canadian employees—swap shares owned for two years—board discretion to prevent offside exercise—board undertakings
  • Prescribed Share Agreements
    • Shareholder Agreement
      • §2132  buy-sell agreement, right to sell, obligation to acquire—post-issue agreements—agreements 2 years after issue
    • Buy-sell Agreement
      • Right Of First Refusal
        • §2133  no ability to cause acquisition—right to acquire shares when clause triggered—price not capped at fair market value
      • Piggy-back
        • §2134  right to cause share to be sold to offeror—when triggered—fair market value, safe harbour—no capped amount—actual amount payable
      • Drag-along
        • §2135  obligation to sell to offeror—no disqualification before offer—safe harbour for market-making with price cap
    • Withholding Tax
      • §2136  redemption to pay withholding tax—net settlement—cashless exercise—penalty redemption
    • Flow-through Share
      • §2137  expense renunciation—disqualification on paid-up capital reduction
  • Repricing Amendments
    • Tax Policy For Repricing
      • §2138  governance—benefit deduction, minimum price—net value requirement for relief exchanges—neutral repricing policy
    • Repricing Methods
      • Overview
        • §2139  repricing by amendment, original price compliant—repricing by exchange, original price compliant—repricing by disposition or deemed disposition, new price compliant
      • Rules Summary
        • §2140  CCPC options—other options, price compliance rules
    • Price Reduction As Variation
      • §2141  price reduced at any time—original price once varied not reduced—one price under agreement
    • Price Reduction As Exchange
      • Basic Rules
        • §2142  amendment deemed exchange—new option for old option—benefit deduction not otherwise available before—benefit deduction available after
      • Cascading Assumptions
        • §2143  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
        • §2144  assumed option exercise after price reduction—benefit deduction unavailable as remedy prerequisite—foreign currency price
      • Eligible Deduction With Deemed Exchange
        • §2145  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
        • §2146  deemed option exchange—net value requirement—price requirement under benefit deduction
    • Disqualified Agreement
      • §2147  timing of repricing—repriced agreement not compliant—no deduction for benefit under disqualified agreement—repricing amendment ineligible
    • Divisible Agreement
      • §2148  plural rights under agreement—reduction of average price—benefit deduction assumed unavailable only for repriced securities
    • Repeated Repricing
      • §2149  regular exercise price reductions—no limit on number
    • Valuation
      • §2150  routine price reduction—distributions supposed to reduce value—net value requirement, fair market value according to established method
    • Corporate Division
      • §2151  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
        • §2152  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
        • §2153  new option from two corporations—benefit deduction, fair market value requirement
      • Net Value Requirement
        • §2154  option exchanged for options in two companies—more shares issued to adjust spinoff value
    • Example #1A: Spinoff
      • Shifting Price Between Entities
        • §2155  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
        • §2156  spinoff exchange—all consideration from one of the resulting entities
  • Gift Of Securities
    • Conditions
      • §2157  additional benefit deduction—gift of listed security to registered charity—timing of donation
    • Brokered Gift
      • Overview
        • §2158  cashless exercise—direction to broker to sell security and pay proceeds to charity—benefit on acquisition of security—taxpayer as employee
      • Direction To Broker
        • §2159  broker appointed by issuer—content of direction—disposition of security, payment of proceeds
      • Dispose Of And Pay
        • §2160  broker actions, not taxpayer's—direction to act immediately—delays
      • Payment Of Proceeds
        • §2161  payment to charity by broker—gift of proceeds of short sale, not compliant—value discrepancy between exercise and actual sale
      • Donation
        • §2162  donation at law—time of gift deemed time of payment—no withholding if brokered gift
      • Prorating Benefit
        • §2163  prorated for actual payment—adjusted for actual proceeds
      • Benefit Discrepancy
        • §2164  security-by-security determination—actual values or average—discrepancy in benefit deduction computation
    • Prorating Benefit
      • Example, Broker Exercise And Disposition
        • §2165  funding purchase price and transaction fees
        • §2166  gift benefit deduction reduced by transaction fees
    • Designation
      • Overview
        • §2167  deemed order of disposition for identical properties—gifted securities identified as disposed of
      • CCPC Shares, Ordering
        • §2168  deferral shares disposed of last—election to identify gifted deferral shares—gift in year of acquisition or exchange
      • Example: Disposition By Gift Of Shares
        • §2169  election to identify shares gifted—identical properties—capital gain
  • Non-qualified Securities (NQS)
    • Overview
      • §2170  benefit deduction limitation—US model—specified person—annual vesting limit—vesting year
    • Benefit Inclusion And Deduction
      • §2171  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
    • Timing
      • Benefit Inclusion And Deduction
        • §2172  no unique time for determinations—US statutory options, time of grant—benefit, year of acquisition—benefit deduction, end of taxation year
      • Vesting Limit Conditions
        • §2173  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
        • §2173.1  fair market value—date of agreement—no currency conversion after date—benefit deduction
      • Compliant Agreement
        • §2174  agreement, meaning—vesting limit for compliant agreements—deduction room for compliant agreements—compliant but no benefit deduction—designation—pre-employment agreement
      • Employment
        • §2174.1  relevant time of agreement—leaving an employment—becoming specified person—agreement before employment
      • CCPC Change In Status
        • §2174.2  CCPC benefit deduction—general benefit deduction—vesting limit erosion—designation—notification
      • Transitional Rules
        • §2174.3  enactment—grandfathered exchanges—exchanges as new grant—reduction of deduction room—avoiding disposition
    • Formula
      • §2175  annual vesting limit—elements of formula—formula text—formula inapplicable if designation
      • Stated As Allocation Method
        • §2176  agreements ranked by date—earlier agreement allocated deduction room—later agreement gets remaining room—ineligible securities—designation
      • Formula Elements
        • §2177  programmable formula—legislative technique—elements in table form—elements explained—example
      • Deduction Room
        • §2177.1  securities excluded—prior agreements—securities to be issued—timing of determination—wasted deduction room
      • Example: One Agreement
        • §2178  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
        • §2179  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
        • §2180  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
    • Annual Vesting Limit Calculator
      • §2180.1  computation formula—enter details of options—calculate proportion of non-qualified securities
    • Specified Person
      • §2181  vesting limit for large non-CCPCs—definition of threshold—consolidated group revenue—gross revenue—policy preference
  • NQS Awards
    • Designation
      • Procedure
        • §2182  designated as non-qualified or apportioned under formula—designation by grantor—why designate?—no method enacted—designation compared to notification
      • Example: Underdesignation
        • §2183  designation insufficient—formula allocation—designated securities excluded from later awards—changing designation
      • Example: Volatility Differentials
        • §2184  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
        • §2185  vesting year—two determination methods—calendar year method—date translatable into calendar year
      • Acceleration
        • §2186  specified calendar year—accelerating condition—60-method method if no year specified
      • Transfers
        • §2187  specified calendar year for taxpayer—right exercisable by taxpayer, not transferee—60-month method for transferee
      • Conditionally Specified
        • §2188  first becoming exercisable—conditionally exercisable in calendar year—conditions not deemed satisfied—unlikely conditions, when exercisable—IRC assumption implicit?
      • Foreseeability
        • §2189  reasonably foreseeable event—eventuality without specific time—reasonable probability in particular year—determined at grant
      • Event Foreseeable
        • §2190  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
    • Vesting Year Modification
      • Time For Determining
        • §2191  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
    • 60-month Vesting Fiction
      • §2192  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
        • §2193  benefit deduction, security by security—plural frame for 60-month method—same beginning and end, same vesting year —ordering acquisition for a security
  • NQS Vesting Changes
    • Vesting Year Modification
      • Changing Vesting Year
        • §2194  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
        • §2195  example—underwater options—spreading vesting over more calendar years—effect of change on deduction room
      • Example: Exchanges
        • §2196  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
        • §2197  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
    • Transfer To Third Party
      • Vested Person
        • §2198  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
  • Ordering NQS
    • Designating Agreement Date
      • §2199  simultaneous agreements—formula mismatch—agreement as distinct offer—separating offers into distinct agreements—designating distinct offers
      • Example: Splitting Up Agreements
        • §2200  distinct offers in same agreement—loss of deduction room if simultaneous—designation of order for offers as separate agreements—dividing agreement into offers
    • Deemed Order Of Acquisition
      • Overview
        • §2201  ordering at time of acquisition—order for particular option—non-qualified securities acquired last
      • Example: Two Agreements
        • §2202  acquisition under option—eligible securities determined for particular option—non-qualified securities acquired after eligible securities
      • Example: Two Methods, Unvested Tranche
        • §2203  order of acquisition for vested securities—unvested securities could not be acquired—unvested acquired after vested securities
  • NQS Deduction
    • Employer Deduction
      • §2204  deductibility of stock compensation—expense representing deemed benefit—corporate deduction for non-qualified securities
    • Employee Benefit
      • §2205  benefit under agreement deductible by taxpayer—employee at time of agreement—benefit in respect of employment with taxpayer
    • Crossborder Employee
      • §2206  benefit for non-resident—OECD apportionment of benefit—deduction limited to Canadian liabiltiy
    • Qualifying Person
      • §2207  qualifying person as deduction claimant—partnerships and most trusts not included—qualifying person as corporate partner—foreign branch
    • Deduction, Taxable Income
      • §2208  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
      • §2209  benefit upon death—deduction from taxable income, heirs—no deduction for vested person after death
    • Notification
      • §2210  notification—employee, 30 days from agreement—minister, filing due-date—if notification erroneous
  • Option Changes
    • Introduction
      • §2211  agreement changes—compliant agreement—modification as disposition—benefits in kind—history
    • Statutory Dispositions
      • Definition
        • §2212  sale price—interest or right in share—similar security—right to receive amount—option expiry—amalgamation
      • Caselaw
        • §2213  disposition—alienation—"disposer"—emphyteutic lease—right extinguished—no change in substance
    • Security Alteration
      • IT-448
        • Dispositions
          • §2214  1980 guidelines—alteration securities—same or different property—no "hard and fast" rules—sufficient substance threshold—shareholder economic interest—statutory basis
        • Not Dispositions
          • §2215  result matters—no effect up corporate chain—restricted shares—time of acquisition—amendment allowed by terms
        • Form Versus Substance
          • §2216  legal form versus substance—new agreement in law or fact—private-law determination—civil law—economic approach—realization—monetary substance
      • Debt Obligation
        • ITTN-14
          • §2217  disposition of debt—1980 policy reversed—threshold—rescission—settlement or cancellation
        • General Electric
          • §2218  debt obligation—new or old obligation—rescission—inconsistencies—fundamental changes—options
        • Directorate Policy
          • §2219  uncertainty—as a matter of law—inconsistencies—substantial changes—sufficiently fundamental
        • Rulings And Interpretations
          • §2220  maturity date—automatic renewal—debt assumption—novation—IBOR to RFR—credit default swap
      • Option Agreement
        • Agency Policy
          • §2221  stock plan policy—Wiebe—fundamental change—qua shareholder or employee—monetary significance
        • Revised Policy
          • §2222  fundamental change—creation new agreement—Amirault—amendment—variation, no rescission—change retroactive
    • CRA Positions
      • Overview
        • §2223  private-law determination—rescission for fundamental changes—private-law as one source of guidance—option components—monetary significance
      • Repricing
        • Method For Achieving
          • §2224  not fundamental change—corporate split-up or spin-off—amendment—new option—cancellation—documentary changes
        • Rulings
          • §2225  spin-off—division—disposition—exchange relief—substance—repricing relief
      • Appreciation Right
        • §2226  amendment—net option cash settlement—no disposition of rights—business significance
      • Extension Of Term
        • §2227  expiry—no rescission, cancellation, novated—no disposition—monetary significance
    • Problem Changes
      • The Agreement
        • §2228  not collective plan—option as separate agreement—multiple options in same agreement—documentary agreement—disposition of some rights—shareholder rights
      • Agreement Ceasing To Qualify
        • §2229  right to acquire shares—cash settlement—disposition—exchange relief—not exercisable—benefit in kind
      • New Party, More Shares
        • §2230  party substitution—disposition if fundamental change—rights identical—cancellation—private-law determination—share quantity
      • Implicit Realization
        • §2231  realization—option consoilidation—cash payment for rights—net settlement—"the" shares
      • Agreement Contemplating Variation
        • §2232  sponsor plan modifications—change of control—alteration—adding conversion privilege—when not disposition—debt obligation policy—discretion as plan feature
      • "Disposition To"
        • Court Cases
          • §2233  surrender of rights—translative transfer or disposition—for the account of—literal interpretation—substance approach
        • Disposition Of Shares On Cancellation
          • §2234  "disposition to" on exchange of shares—amendment for "disposition to" on redemption—rollover on disposition to corporation of its shares
        • No Acquisition Of Option
          • §2235  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
        • §2236  modification, renewal, extension as grant of new option—modification as delivery of additional benefits—Canadian policy value-blind
    • Limited Guidance
      • §2237  fundamental change as disposition—avoiding a disposition—ensuring a disposition—option exchanges
  • Option Surrenders
    • Introduction
      • §2244  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
        • §2245  shares as compensation for options—deemed benefit on settlement
      • Reynolds FCTD
        • §2246  no disposition to third party—shares as compensation for options—share settlement as damages—shares not income
      • Reynolds FCA
        • §2247  shares as compensation for options—settlement before or after breach—post-breach settlement not under agreement
    • Amalgamation
      • Greiner FCTD
        • §2248  net option buyout—no breach—disposition of rights under agreement
      • Greiner FCA
        • §2249  amalgamation—net option buyout—breach of agreement as question of fact—disposition "to" includes surrender—discharge before settlement
    • Merger
      • Harvey TRB
        • §2250  compensation stipulated in merger agreement—damages due to breach—consideration for disposition?
      • Harvey FCTD
        • §2251  compensation stipulated in merger agreement—surrender of rights—no prior breach—disposition "to"
    • Termination
      • Mackay TCC
        • §2252  unvested options—payment allegedly for rights surrendered—employment benefit
    • Dundas Buccini Appeals
      • Overview
        • §2253  contradictory decisions, same events—taxable disposition of rights or damages—origin of statutory remedy
      • Dundas TCC
        • §2254  amalgamation—rights surrendered—payment for cancellation, benefit from employment—damages taxable
      • Dundas FCTD
        • §2255  amalgamation—rights surrendered by implicit agreement—disposition on surrender—no breach
      • Dundas FCA
        • §2256  amalgamation—tacit modification of agreement—when agreement is discharged—not damage settlement
      • Buccini TCC
        • §2257  amalgamation—rights survive amalgamation—cause of action continued after amalgamation—disposition under agreement, deemed benefit
      • Buccini FCA
        • §2258  repudiation terminates contract—compensation as damages—disposition by consent taxable, not otherwise
    • Takeover
      • Bernier TCC
        • §2259  relative nullity of agreement followed by takeover—options disposed of under null agreement—no stock benefit deduction, shares could not be issued
      • Bernier FCA
        • §2260  voluntary or involuntary surrender—no event within benefit provisions—failure of appellant to challenge assessment
    • Damages Or Income
      • Quo Vadis Dundas-Buccini?
        • §2261  cases classified—cause of action, damages—breach, compensation—special meaning of "disposition"?—inside or outside agreement
    • Pre-employment Rights
      • Schwartz TCC
        • §2262  aborted employment—unallocated rights to damages—settlement tax-free
      • Schwartz FCA
        • §2263  surrogatum—employment contract as source of damages—surrogatum where benefit otherwise escapes liability—investment opportunity as source of stock benefit
      • Schwartz SCC
        • §2264  settlement unallocable to salary or options—not retirement allowance, not taxable—not from unenumerated source—limits of surrogatum
    • Surrogatum
      • §2264.1  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
      • §2265  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
        • §2266  amendment—coincidence—remedy?—no evidence of purpose
      • Statutory Remedy
        • §2267  analogy to wrongful dismissal—payment on termination—retiring allowance—express inclusion of damages—cause of income—breach as source
      • Explanatory Notes
        • §2268  explanatory notes example—disposition or not?—formal cancellation as disposition—fundamental breach as disposition—root inconsistencies as question of fact
    • Cessation Event
      • Unvested Options
        • §2269  ceasing to be exercisable—payment upon merger—no disposition—option cessation whether vested or not—vesting and exercisability conflated
      • Option Expires
        • §2270  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
        • §2271  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
        • §2271.1  merger—exchange of shares for option—plan terms—ceasing to be exercisable—in accordance or not—no disposition
      • Modifying Agreements
        • §2272  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
        • §2273  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
        • §2273.1  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
        • §2274  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
        • §2275  deemed disposition of rights upon receipt—taxpayer not employee—recapture of cost over multiple payments—foreign currency payment
      • Amounts Received As Consideration
        • §2276  series of receipts over time—disposition for each payment—cumulative cost of rights—meaning of value of consideration
      • Timing Of Disposition
        • §2277  deemed disposition at time of receipt, not cessation—eligibility for benefit deduction—prescribed share conditions evaluated at time of each disposition
      • Benefit Deduction
        • §2278  benefit deduction, unexercisable right—election to forego deduction of payment—no payment for disposition or transfer
      • Inadequate Consideration
        • §2279  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
        • §2280  not disposition, possibly not transfer—cessation if rights unassignable—amount received on return of rights—cessation final—holding trust
      • Repricing
        • §2281  drawdown of appreciation—no disposition—cash under safe harbour—ceasing to be exercisable at given price?
      • Vested Person
        • §2282  taxpayer as employee—rights under agreement—transfer to vested person—amounts received by vested person—no attribution—damages
      • Death
        • §2283  deemed disposition immediately after death—right extinguished—cessation by reason of death—beneficiary not taxpayer
    • Contingent Amounts
      • Benefit Determination
        • §2283.1  merger or acquisition—benefit valuation—contingency accounted for—rights ceasing—additional payments—safe harbour
      • Plan Clause Amendment
        • §2283.2  contingent amount as consideration—commutation by plan authority—benefit overestimation—amending return
  • Option Exchanges
    • Relief
      • Overview
        • §2284  option exchange—qualifying entities—continuity fictions—compliant agreement—safe harbour—history—no employment requirement
      • Qualifying Exchanges
        • §2285  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
        • §2286  rights under agreement—rights of grantor or corporation not dealing at arm's length—new rights not necessarily under compliant agreement
      • Designated Person
        • §2287  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
        • §2288  disposition of rights upon amalgamation—rights not capital property—change of agency policy
      • Option As Capital Property
        • §2289  capital property if no benefit or no disposition—precedence of benefit provisions
    • Continuity
      • §2290  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
        • §2291  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
        • §2292  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
        • §2293  grantor as employer—as employer's parent—grantor and employer—grantor relationship
      • Alternative Issuer
        • §2294  option for shares of one or other issuer—right under agreement?—equivalent to option exchange
      • Loss Of Control
        • §2295  control by grantor given up—control not acquired by designated person—dealing at arm's length, no relief
    • Option Continuation
      • CCPC Shares
        • §2296  conditions for CCPC option—grantor, issuer and employer as CCPC—employee dealing at arm's length—disqualifying exchange—option fictionally continued
      • Disqualified Agreement
        • §2297  agreement ceasing to qualify after exchange—same option continuation—same prior qualifying agreement—benefit deduction
      • Net Share Settlement
        • §2298  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
        • §2299  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
        • §2300  staggered exchange of options—phantom stock not consideration—number of optioned shares unknown before demerger—cessation of exercisability
      • Automatic Exercise
        • §2301  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
        • §2302  boot or shares as consideration—structured as distinct transactions—rights for rights, rights for boot or shares—spinco rights excluded from exchange
      • Dividend Equivalents
        • §2303  dividend equivalent as consideration other than rights, cash—as rights to shares if payable in shares
      • Bonus
        • §2304  amount received as bonus, not consideration for rights—bonus percentage of strike price
    • Enrichment Test
      • No Excess
        • §2305  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
        • §2305.1  unissued shares—valuation method—price adjustment—special distribution—rounding—change not exchange—time of exchange
      • Foreign Currency
        • §2306  net value equivalence—currency adjusted values—price requirement—original value without adjustment
      • Not Part Of Exchange
        • §2307  reduction of in-the-money value—separate rights exchange—exchange with different corporations
      • Offset Excess Value
        • §2307.1  value discrepancy_time of agreement, time of exchange—remedil measures—adjust ratio—adjust amount payable—grant additional option rights
      • Corporate Division
        • §2308  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
      • §2309  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
  • Deferred Share Exchanges
    • Scope
      • §2310  CCPC shares, disposition or exchange—nonrecognition to maintain deferral—shares, only consideration—qualifying entities—same value test
    • Only For Shares
      • §2311  boot on exchange of deferred shares—fractional, separate lot, split consideration, option—reduction of capital not consideration
    • Continuation Of Deferred Share
      • §2312  no disposition or exchange—new shares deemed old shares—new issuer deemed old issuer—shares deemed issued under old agreement
    • Entities Issuing Share Consideration
      • §2313  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
      • §2314  convertible preferred shares—conversion into common shares excluded from exchange
    • Spinoff Transactions
      • §2315  spinoff exchanges—not dealing at arm's length requirement—qualifying issuer
    • Election Pursuant To 85(1)
      • §2316  rollover election for nonrecognition exchange—eligible rollover property—deferral shares as capital property
    • Adjusted Cost Case
      • §2317  deferral shares, adjusted cost base adjustment upon acquisition—capital reorganization, adjustment reflected
    • Foreign Currency
      • §2318  exchange values—currency adjusted equivalence—capital gain or loss due to currency
  • Settling DSUs
    • Initiating Arrangement
      • Election Before Earned
        • §2319  allocation to exception plan—election required prior to earning amount—expanded constructive receipt policy
      • Preceding Taxation Year Elections
        • §2320  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
        • §2321  policy clarification—election before amount constructively received, core policy restated—election required before amount available for payment—late bonus declaration, tax postponement
    • Settling Arrangement With Shares
      • Overview
        • §2322  settlement of deferred compensation, stock benefit—safe harbour for taxation year of settlement—deduction for forfeited deferred amount
      • Bonus Exception Plan
        • §2323  share settlement of bonus—right to bonus replaced by right under agreement to issue shares—safe harbour—share settlement in original terms
      • Early Policy
        • §2324  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
        • §2325  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
        • §2326  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
        • §2327  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
        • §2328  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
        • §2329  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
        • §2330  maturity of end of employment plan—ability to convert into stock option plan prior to maturity, noncompliant—effect of unexpected conversion
      • Deductibility
        • §2331  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
        • §2332  brokerage fees, benefit for participant—administration fees, not benefit—cost of shares, open market—cost base, treasury
    • Settling Arrangement Upon Death
      • Post-mortem Provisions
        • §2333  DSU payment on death, not periodic or death benefit—"right or thing" if no election prior to death—right to treasury shares disposed of
  • Unit Exchanges
    • Plan Continuity
      • Time Frames
        • §2334  "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?
        • §2335  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
        • §2336  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
    • Unit Exchanges
      • Share Acquisition
        • §2337  exchange of units—DSUs of purchaser for DSU of target—exchange as plan continuation—exchange as premature payout—exchange as compensation promise
      • Plan Consolidation
        • §2338  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
        • §2339  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
        • §2340  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
        • §2341  split-off or spin-off—DSU plan adjustment—additional units to compensate for lower value of share
      • Directorate Policy
        • §2342  no amount receivable—no boot—units' value equivalent—same terms—related corporation
      • RSU DSU Interconvertibility
        • §2343  convertibility as disqualifying maturity—directorate policy reversed, no ruling for conversion—remaining plan customization
      • RSU DSU Amendment
        • §2344  amending plan—not deferred amount—amendment not payout—units not benefit in kind—disposition of units, no income—no capital gain liability
      • SAR Freeze
        • §2345  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
          • §2346  EPSP conversion—loan and dividend mechanics—SDA exclusion—share rollout from EPSP—employer deductibility
        • Disposition
          • §2347.1  conversion as disposition—dividend-equivalent—fundamental change—payment promise—exclusion of gain
        • Downward Protection
          • §2347.2  SDA exception—disqualification—reduction of impact—upward and downward
        • Profit-sharing Purpose
          • §2347.3  EPSP purpose—GAAR committee—share agreement—open market shares
    • 409A Maturity
      • Unit Exchanges
        • §2348  events incompatible, Canada and US—grandfathering for revoked policy
      • Residence-based Conditions
        • §2349  DSU maturities different, US and Canada—loss of employment as reduction or separation of service—compliance required for all possible maturities
      • Disqualification From Inception
        • §2350  change of control as termination—plan not compliant ab initio following ruling policy reversal
    • Unit Changes
      • §2351  changes affecting units—authority to amend, rights of unit holders—plan maximum units—limit ascertained in following year
    • Dependent Share Changes
      • Typical Clauses
        • §2352  reorganizational events, nomenclature—value adjustments protection—no downward fluctuation clause—change of control—offside changes—no change protection—exchange unrelated corporation
      • Protective Clauses
        • §2352.1  unit exchange—acquisition—continuity—compliance requirement—US plans
    • Plan Winding-up
      • Plan Terms
        • §2353  plan termination—continuous compliance—early termination as disqualifying payout—amending plan to modify term—intra vires power
      • Disqualification In Final Year
        • §2354  rulings accepting premature plan winding-up—disqualification, inclusion in last year—plan compliant in earlier year
      • Retroactive Disqualification
        • §2355  amendment to plan, noncompliant payout—inference of noncompliant intention—retroactive liability for amount deferred
    • Reassessment
      • §2356  inclusion of deferred amount in year becoming noncompliant—statutory reassessment limitation—year of liability or year of reporting?—deductibility of deferred amount inclusion
  • Emigration And Immigration
    • Overview
      • §2357  disposition of property—exclusions
    • "Excluded Right Or Interest"
      • Funded Or Unfunded
        • §2358  EBP not funded not SDA—SDA exception plans, RSU DSU
      • Rights Under Agreement
        • §2359  option outside agreement section 7—trusteed option plans—trust as EBP—personal trust—reportable property
      • CCPC Shares
        • §2360  emigration, benefit deferred, capital gain—immigration, end of deferral—election and security—cost adjustment
    • Excluded Remuneration
      • Residual Exclusion
        • §2361  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
        • §2362  deferred amount—benefit in earlier taxation year—not remuneration in later year—not excluded
      • Appreciation Right
        • §2363  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
        • §2364  remuneration right not excluded—employment income—capital gain on deemed disposition—double tax liability after departure
      • Restricted Shares
        • §2365  shares subject to transfer restrictions—restricted shares not future remuneration—liability for gain on emigration
    • Restructuring Options
      • Immigration
        • §2366  planning for immigration—benefit tax trap—exercise options—change vesting—disqualify the agreement
      • Emigration
        • §2367  apportionment of benefit as non-resident—benefit inclusion as resident, foreign tax credit—returning immigrant
    • Foreign Property
      • §2368  reporting foreign property—cost amount of option—option as capital property
  • Expensing
    • Overview
      • §2369  share compensation—many forms—options and shares—layers of limitations—expense incurred—not capital or prepaid—not contingent—unpaid within 180 days—special rules
    • Plan Contributions
      • Employee Benefit Plan
        • §2370  acquisition of treasury shares by trust or custodian—not Employee Benefit Plan—arrangement governed by stock benefit agreement
      • Profit-Sharing Plan
        • §2371  employees profit sharing plan, treasury shares, primacy of stock benefit agreement—deferred profit sharing plan, no primacy
      • RRSP, RRP
        • §2372  RRSP employer contribution, employer treasury shares—employer deduction denied—shares deemed acquired by employee—applicability of safe harbour—taxation of RRSP benefits
    • Equity Expenditure
      • §2373  share for property exchange—expenditure denial or reduction—money reinvested—dilutive excess—cost as share par value—cost two-way consideration
    • Alcatel
      • §2374  SR&ED expenditure—expense on grant—expense on share settlement—accounting treatment—tax benefit and expenditure not matched
    • Dilution
      • §2375  equity expenditure as dilution—property or services as money's worth—services during vesting period—new policy trend—corporate theory revisited
    • Option Or Share Expenditure
      • §2376  remedial enactment—for greater certainty—broker remuneration—not included in expenditure—statutory cost—inadequate consideration—non-qualified securities
    • Recognition
      • Option Expenditures
        • §2377  option as contingent liability—GAAP recognition—option not obligation—option as value delivery—option as benefit by employer
      • Share Expenditures
        • §2378  expenditure by issuing shares—GAAP—share for property—share for debt—share for expenses—property contributed by shareholder
    • Mechanics
      • Outflows And Inflows
        • §2379  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
        • §2380  denial rule—reduction rule—option sold—option reissued—statutory cost override—amalgamation exchanges—non-person entities
    • Option
      • Dual Definition
        • §2381  option as security—option as optional right—intent
      • Legal Concept
        • §2382  common or civil law meaning—primary or accessory contract—option as multiform undertaking—similar right—option or obligation
    • Interest
      • Interest In Taxpayer
        • §2383  interest and legal or financial concept—French rendering of interest as participation—participation as financial term—bijuralism amendments—consistent statutory use
      • Interest Caselaw
        • §2384  judicial consideration—inducement reimbursement limitation—provision amended—participation not restricted to direct right
      • Interest Directorate Policy
        • §2385  interest as economic stake—option as interest in taxpayer—not dealing at arm's length—limitation on entity subject to option
      • Interest In Option
        • §2386  option in respect of option—opposite interpretations—derivative interest
    • Because Of
      • Inflows And Outflows
        • §2387  expenditure denied or reduced—any expenditure paid with options or shares—only expenditures arising because of mode of payment—outflow based on prior obligation
      • No Prior Liability
        • §2388  rebates deductible if paid—not deductible if paid with shares—no prior liability—expenditure because of share payment
  • Option Expenditures
    • Option For Property
      • §2389  property for property—option for property—cost determined by consideration—consideration not necessarily value of options—cost of property determined by consideration—option as mode of payment
    • Option For Money
      • §2390  money as property—coast amount of money—money as consideration—cost determined by money—no dilution option issued for money's worth
    • Option For Services
      • §2391  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
      • §2392  option as security under agreement—option as right to acquire shares—technical double denial—no reduction if expenditure denied or prohibited
    • Option For Option
      • §2393  cost of acquiring option—expenditure not inclusive of cost—net expenditure—because of payment of price
    • Option Settlement
      • §2394  cash settlement normally deductible for compliant agreement—dilution caused by option—appreciation due to option—expenditure caused by surrender not issuance
    • Option Expiry
      • §2395  option capital or income—option expiry—deemed disposition if optionee non-arm's length—option for share swap—double exposure
  • Share Expenditures
    • Swap Option To Pay For Share
      • §2396  swap for payment of shares under agreement—cost of swap options—reduction if cost included because of shares—no excess
    • Timing Of Consideration
      • §2397  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
      • §2398  share bonus as right to acquire shares—share under agreement as options—tax credit for share bonus expenditure—appreciation as mischief
    • Bonus Shares Outside Agreement
      • §2399  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
      • §2400  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
      • §2401  loan by shareholder—principal repaid by issuing shares—debtor's gain or loss—creditor's consideration—reduction of forgiven amount
    • Equity For Interest
      • §2402  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
      • §2403  cost recognition—statutory rules for reorganizations—directorate policy for reductions—nil cost on exchange of agreement shares
    • Open Market Shares
      • §2404  contribution to trust—employee benefit plan—open market shares—option grant by trust—option exercise—benefit allocation—non-trusteed arrangement
  • Capital Expenditures
    • Overview
      • §2405  capital outlay, not deductible—contingent amount not deductible—legal obligation to pay or to reimburse issuer
    • Cash Settlement On Takeover
      • §2406  cancellation of options, when capital outlay—compensation expense or expenditure of enduring benefit
    • Planning For Acquisition
      • §2407  planning for cancellation—rights exchanged rather than extinguished
    • Eligible Capital Expenditure
      • §2408  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
      • §2409  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
      • §2410  deductibility of compensation expense—policy review—no deduction if security sold or issued—deductible if cash-settled under agreement
    • Share Settlement
      • §2411  legally-binding agreement, no deduction—share settlement declined—cash settlement induced
    • Net Settlement
      • §2412  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
      • §2413  deduction of tax withheld—cash benefit or share benefit—directorate policy reversed
  • Recharging
    • Overview
      • §2414  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
      • §2415  cross border benefits—nondeductible reimbursement by subsidiary, no benefit—cost assumption by employer, no benefit
    • Financial Standard Valuation
      • §2416  shareholder benefit for unreasonable reimbursement—measure of benefit, intrinsic cost—acceptability of GAAP expense
    • Inducement, Benefit, Dividend
      • §2417  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
      • §2418  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
      • §2419  reimbursement by foreign subsidiary—deductibility in computing taxable surplus
  • Marketmaking
    • Overview
      • §2420  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
        • §2421  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
        • §2422  share purchase—entity other than issuer—surplus stripping—not at arm's length—accommodation—true divestment—employee buyco—risks and purpose
      • Compensatory Equity
        • §2423  corporate distribution—option buyout—deductible expense—share redemption—benefit added to cost—capital loss—double liability
      • Subordination
        • §2424  share exit predetermined—arm's length condition—CCPC option inclusion—option benefit deduction—insurable employment—option and buyout inseverable?—commerciality
    • Buyout By Trust
      • §2425  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
    • Buyout By RCA
      • Overview
        • §2426  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
          • §2427  investment by member—significant interest in employer—expanded definition—specified shareholder—threshold deeming provisions—trust or partnership
        • Signficant Interest
          • §2428  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
          • §2429  share sale—fair market value—RCA advantage—value shift or strip—diversion payments—general benefit
        • Value Shift Or Strip
          • §2430  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
          • §2431  economic benefit—when benefit conditional—transfer at overvalue or undervalue—loan exclusion—no exclusion for contribution—income inclusion of payment
      • GAAR
        • §2431.1  tax benefit—capital gain deduction—computation of RCA tax—abuse or misuse—artificiality—sale between employees—sale between third party and RCA
      • Special Tax
        • §2432  taxable preferred shares—buyout undertaking—minimum and maximum—fair market value exceptions—short term preferred shares
• EQUITY STRUCTURES §3001 - §3009
  • 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
• RISK ASSESSMENT §4001
  • Open Market Shares
    • §4001  risk assessment—open market shares for trust—open market shares for employer—out-of-pocket costs—self-contradictory policy—discretionary arrangement