Proposed Amendments To The Stock Option Rules

Leading up to the 2015 federal election, the current government's platform contained a pledge to cap or limit the availability of the employee stock option deduction provided for in the Income Tax Act (Canada) (the "ITA"). However, the federal budgets introduced in 2016 through 2018  were silent on the issue.  Budget 2019 revisited the issue and announced the government's intention to impose an annual $200,000 limit on the stock option deduction for employees of large, long-established, mature companies, but few details were provided in the Budget 2019 materials.  On June 17, 2019, the Minister of Finance tabled a Notice of Ways and Means Motion that contains the proposed amendments, which are intended to be effective for options granted after 2019.  This article examines and comments on the proposed changes.