Stock Options Amendments Will Not Have Retroactive Effect

As discussed in our prior bulletin, the newly elected Liberal government indicated in its electoral platform that it intended to make certain tax-related changes, including changes to the tax treatment of stock options. The issue of whether existing options would be grandfathered was subject to much speculation over the last few weeks.

What You Need To Know

• On November 20, the Minister of Finance Bill Morneau held a press conference in connection with the release of the Economic and Fiscal Update where he announced that "any decision we take on stock options will affect stock options issued from that date forward."  This announcement effectively provides for the grandfathering provisions that many in the business community had hoped for and alleviates concerns about the premature exercise of options resulting in market disruptions.
• The Minister also mentioned that the government is still considering what amendments will be made to stock option rules, which would indicate that any proposed amendments may not be as immediate as some may have anticipated.