At the outset of any business endeavour, generating funding and
determining how to compensate employees often go hand in hand.
There are generally three options available to compensate
employees and attract investors: stock options, profit sharing, and
debt financing. A stock option is a right to buy a share at a
particular price on specific terms. If the value of the company
increases above the exercise price (that is, the price at which the
option shares can be purchased), the option-holder benefits. Stock
options are often the most common form of equity used in employee
compensation packages and receive favourable tax treatment under
the Income Tax Act.
In October 2015, the new Liberal government had pledged to
increase taxation of stock options on gains exceeding $100,000 as part of their overarching
objective to increase tax on wealthy Canadians:
[...] The Department of Finance estimates that 8,000 very
high-income Canadians deduct an average of $400,000 from their
taxable incomes via stock options. This represents three quarters
of the fiscal impact of this deduction, which in total cost $750
million in 2014. Stock options are a useful compensation tool for
start-up companies, and we would ensure that employees with up to
$100,000 in annual stock option gains will be unaffected by any new
Canadian start-ups argued that such a tax would stifle
recruitment in the start-up sector where employees often accept
lower salaries in return for stock options. Fortunately, stock
options will continue to receive favourable tax treatment under
the Income Tax Act. Finance Minister, Bill
Morneau, told reporters the cap would be omitted from the budget with no plans on
instating it in the near future. This news
was welcomed in the start-up space.
Written with the assistance of Saam Pousht-Mashhad, summer
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Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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