January 2021 Newsletter

Currently, employee stock options are taxed preferentially under the Income Tax Act relative to other forms of remuneration. 

There is no taxable benefit to the employee when the stock option is granted. Instead, the inclusion of the stock option benefit is normally deferred to the year that the option is exercised and the underlying shares are acquired. However, if the employer issuing the shares is a Canadian-controlled private corporation (CCPC), the inclusion of the benefit is deferred further to the year that the shares are sold

When you take out a loan from a bank or otherwise, the amount of the loan is obviously not included in your income.

However, if you are a shareholder of a corporation and receive a loan from the corporation, the "shareholder loan rule” under the Income Tax Act applies such that the principal amount of the loan will be included in your income, unless you fall within one of the exceptions discussed below.

There are a few ways you can have a foreign exchange (FX) gain or loss. 

If you do, you will have a taxable capital gain or allowable capital loss (unless you are in the business of trading foreign currency, in which case your gains and losses will be business income or loss).

When an agricultural cooperative corporation pays a patronage dividend, the recipient is normally required to include the dividend in the year of receipt. The cooperative is required to withhold tax on the dividend.

Grievance payment included in income

Most payments received in relation to your employment or loss of employment are included in your income. 

However, a payment of damages for personal injury (for example, physical or mental injury or distress) is normally not included in income.