RSPs are an opportunity for employers to offer employees shares
above the limits imposed by the tax favoured approved share
schemes. Awards under an RSP are commonly used as a means of
rewarding, incentivising or retaining employees or for a
combination of these objectives. The RSP is usually used on a
selective basis. The plan is structured so growth in value of the
shares is taxed under the more favourable capital gains tax
regime.
What is an RSP?
RSPs are used by listed and privately held companies, to
encourage employees to own shares in their employing company and to
participate in the growth of the company. The shares offered carry
restrictions which reduce the value of the shares on acquisition.
If the necessary elections are made and income tax paid at the
outset, the growth in the value of shares will be taxed as capital
gains.
