On March 22, 2016, the Liberal Government delivered its first
budget which focuses on the growth of the middle class. As
outlined in a
previous post on Canadian M&A Law, the
Liberals, as part of their election platform, promised to change
the taxation of stock options.
Currently, if the required conditions are met, when an executive
exercises a stock option, a one-half deduction is available to
allow for capital gains-like tax treatment on exercise. The Liberal
platform promised to introduce a cap of $100,000 on the amount that
can be claimed through this stock option deduction. The Liberals
also stated that stock options are a useful tool for start-up
companies. Finance Minister Bill Morneau offered some reassurance
when he stated in November 2015 that stock options issued under the
old regime would continue to be taxed under the old tax regime.
Interestingly, Budget 2016 is silent regarding the taxation of
stock options. This means that the stock option deduction will, for
the time being, remain the status quo, with no caps or specific
exceptions for technology companies or start-ups. On this issue, at
least, executives can breathe a sigh of relief (for now). Query
whether the promised changes will be announced in Budget 2017 in an
effort to reduce the federal deficit from the Finance
Minister's forecast of $29.4 billion for the upcoming
year. However, asked if his government might increase options
taxes in future budgets, the Finance Minister said: "It's
not in our plan."
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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