Let's get started

USA
Andorra
Argentina
Australia
Austria
Bangladesh
Belarus
Belgium
Bosnia & Herzegovina
Brazil
Bulgaria
Canada
Central African Republic
Chad
Colombia
Croatia
Cyprus
Czech Republic
Denmark
Ecuador
Egypt
Equatorial Guinea
Estonia
Ethiopia
Finland
France
Gabon
Germany
Ghana
Greece
Hong Kong
Hungary
India
Indonesia
Ireland
Israel
Italy
Ivory Coast
Kenya
Latvia
Lebanon
Lithuania
Luxembourg
Malta
Mexico
Moldova
Montenegro
Morocco
Netherlands
New Zealand
Nigeria
Norway
Pakistan
Peru
Philippines
Poland
Portugal
Republic of the Congo
Romania
Senegal
Serbia
Singapore
Slovak Republic
South Africa
Spain
Sweden
Switzerland
Turkey
UAE
Ukraine
United Kingdom
Uruguay
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Granting equity in 

the 

Canada

 

Get to know everything about your taxation and reporting obligations in 

the 

Canada

Looking to offer equity to team members in 
the 
Canada
?
Try Easop

Introduction

Regular employee

NSO

You can grant non-qualified stock options (NSO) to local residents in Canada. It works and is an excellent option to incentivize team members.

Taxation will generally be:

  • At grant: There’s no taxation at grant.

  • At exercise of the stock options: The stock options are taxed at the time of exercise, as salary income. The company will be responsible for reporting/withholding the taxes. There will be a possibility to reduce the taxable amount by half, subject to certain conditions.

  • At sale: The sale price minus the FMV of the shares at exercise will be taxed either as capital gain.
There are tax advantages available when granting stock options to Canadian employees. The effect is that only half of the amount due at the time of the exercise of the stock options will be effectively taxed!

Employee via EoR

NSO

You can grant non-qualified stock options (NSOs) to local residents employed via EoR in Canada.

Taxation will generally be:

  • At grant: There’s no taxation at grant.

  • At exercise of the stock options: The stock options are taxed at the time of exercise, as salary income. The EoR will be responsible for reporting/withholding the taxes so inform them asap when the grantee informs the company, he/she wants to exercise.

  • At sale: The sale price minus the FMV of the shares at exercise will be taxed either as capital gain (most likely) or regular income (less likely).  

There are no specific tax advantages available when stock options are granted to employees employed via an Employer of Record (EoR).

Contractor

NSO

You can grant non-qualified stock options (NSOs) to local residents employed as contractors in Canada.

There are no legal obstacles but the tax treatment of stock options offered to contractors is not clear: it’s difficult to tell how and when stock options are going to be taxed by the Canadian tax authorities (because the gains realized could be considered as either business income or as a capital gain).

For this reason, it’s recommended that the grantee consults with a personal tax advisor, in particular at the time of exercise of the stock options and upon sale of the shares.

The most likely taxation is:

  • At grant: It’s unlikely that there would be a taxation at the time of grant.

  • At exercise: The difference between the FMV of the shares at exercise and the exercise price would normally be taxed at the time of exercise, either as (i) a business income or (ii) a capital gain (which is less heavily taxed compared to business income, because only 50% of the gain is taxed).

  • At sale: The difference between the sale price and the FMV of the shares at the time of exercise will be taxed, most likely as capital gain.

The company won’t legally have to do anything vis-à-vis the local authorities as it will be the grantee’s responsibility to report the taxable gains and pay the taxes.

There are no specific tax benefits that apply for contractors.

Want to know more about equity in 

the 

Canada

?

Discover everything you need to know about taxation and reporting obligations for you and your team in 

the 

Canada

Get in touch