Changing the stock option dynamic negatively affects the Canadian startup business climate, at a time when our community is looking for all ways to move Canada to number one ranking for innovation and competitiveness. (CATAAlliance)
|Ottawa, ON…CATAAlliance (www.cata.ca), Canada’s One Voice for Innovation lobby group, has renewed its called for no consideration of increasing taxes on employee stock option benefits by limiting Canadian resident employees from claiming the stock option deduction in respect of option benefits in excess of $100,000 annually.
The renewed call came in response to the NDP announced opposition motion to give the government the opportunity to keep its promise on eliminating the stock-option loophole by including the measure in their Budget 2018.
In 2015, CATA launched a successful Stock Option advocacy campaign as part of helping to advance Canada’s innovation and competitiveness ranking to number one from middle of the pack.
At that time, the platform estimated that the stock option deduction cost the Canadian government $750 million in 2014. However, it failed to account for the fact that employers generally forgo a tax deduction where employees are entitled to the stock option deduction. This effectively allows stock options to be taxed in a manner similar to capital gains.
CATA CEO, John Reid said, “Changing the stock option dynamic negatively affects the Canadian startup business climate, at a time when our community is looking for all ways to move Canada to number one ranking for innovation and competitiveness. Such a change in Canada’s stock option dynamic would make it more difficult to attract and keep the talent enterprises need to drive forward innovation and commercial success.”
Reid added, “And that talent challenge also applies to attracting and keeping best CEO’s because stock options make up for lower Canadian compensation levels compared to U.S. peer firms. Having options taxed at 50 percent can bridge that compensation gap with earnings invested back into the economy in areas such as angel investing to consumer purchases.”
Download White Paper on “Will Tax Treatment for Canadian Stock Options Change?”(Davies Ward Phillips & Vineberg LLP) at:
Houston said, “Employees accept lower compensation rates in exchange for the stock options they receive and thus the potential for valuable equity when the enterprises is successful in the marketplace.”
Reid and Houston concluded, ” The NDP needs to re-evaluate its stock option motion with regard to the overall impact of implementing any limitation to the stock option deduction, and beneficial value as a resource to attract and keep the talent needed for growing Canada’s competitive innovation nation”.
Watch Our Stock Option Interviews with Thought Leaders
Through a series of video interviews we show that changing the stock option dynamic negatively affects the Canadian startup business climate, at a time when our community is looking for all ways to move Canada to number one ranking for innovation and competitiveness.
The Canadian Advanced Technology Alliance (CATAAlliance) is Canada’s One Voice for Innovation Lobby Group, and is crowdsourcing ideas and guidance from thousands of opt in members in moderated social networks in Canada and key global markets. (No Tech Firm Left Behind)