Stock options to get hit with higher taxes under new Liberal budget Budget2019
Under the current rules, employee stock option benefits are taxed at half the normal rate of personal income -- the same rate as capital gains.
The government plans to exclude start-ups and rapidly growing businesses from the cap, to allow them to use potentially lucrative stock options as a tool to attract and reward employees without necessarily paying big salaries. The government said the rationale for preferential tax treatment of employee stock options is to support younger and growing businesses and that it does not believe that they should be used as compensation for executives of large, mature companies only because they come with favourable tax treatment.Bruce Ball, vice-president for taxation at the Chartered Professional Accountants of Canada, said the details of the plan will be key.
The Liberals set themselves up similarly in their 2017 budget, promising changes to restrict the use of private corporations by professionals such as doctors to get better tax treatment for their incomes, with details to come. When Morneau released those details the following summer, the angry reaction ultimately caused the government to back down.
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