Federal Budget Changes Affecting Employment

On March 19, 2019, Finance Minister Bill Morneau tabled in the House of Commons the Liberal Government's fourth budget, Investing in the Middle Class ("Budget 2019"). Budget 2019 proposes a number of tax changes and measures of interest to employers and employees.

Limits on employee stock options

Budget 2019 proposes a $200,000 annual cap on stock option grants (based on the fair market value of the underlying shares) that may receive tax-preferred treatment for employees of "large, long-established, mature firms". Employee stock option benefits for "start-ups and rapidly growing Canadian businesses" would not be subject to the proposed limit. More details of this measure will be released before the summer of 2019. Any changes would apply on a go-forward basis and would not apply to employee stock options granted before detailed proposals are announced.