Canada ๐Ÿ‡จ๐Ÿ‡ฆ

Country guides for offering equity compensation to remote employees

Looking to offer equity to team members inย 
the
Canada ๐Ÿ‡จ๐Ÿ‡ฆ
?
Book a demo

Introduction

Direct employees

Can receive NSO?

โœ… Yes!

General taxation

Spread taxed at exercise. Specific regime whereby 50% of spread can be deducted when calculating taxable amount can apply, subject to conditions.

At sale, the sale price minus the FMV of the shares at exercise is taxed as capital gain.

General tax, reporting & legal paperwork difficulty score

๐Ÿคฏ

Tax advantages

Thereโ€™s a tax advantage available when granting stock options to Canadian employees, if some conditions are met.

Effect: 50% of spread can be deducted when calculating taxable amount.

EoR employees

Can receive NSO?

โœ… Yes!

General taxation

There are no legal obstacles but the tax treatment of stock options offered to contractors is not clear: itโ€™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).

Itโ€™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.

Perdonal tax advisor assistance is highly recommended.

General tax, reporting & legal paperwork difficulty score

๐Ÿคฏ

Tax advantages

-

Contractors

Can receive NSO?

โœ… Yes!

General taxation

Spread taxed at exercise, as salary income.

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).

General tax, reporting & legal paperwork difficulty score

๐Ÿคฏ ๐Ÿคฏ

Tax advantages

There are tax advantages available when granting stock options to Canadian employees, if some conditions are met.

Effect: 50% of spread can be deducted when calculating taxable amount.

It is not sure that this tax advantage can apply when options are granted to an EoR employee (law firms have diverging views on this).

Want to know more about equity in

the

Canada ๐Ÿ‡จ๐Ÿ‡ฆ

?

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

the

Canada ๐Ÿ‡จ๐Ÿ‡ฆ

Get in touch

Let's get started

Just a few more details...

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
Georgia
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
Slovakia
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.