Will the New Liberal Government Drive Innovation Talent Out of Canada towards our Competitors: the Quo Vadis of Stock Options?
January 11, 2016


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Changing the current stock option dynamic is the wrong path to attract and keep best talent in Canada, at a time when our community is looking for all ways to move Canada to number one ranking for innovation, competitiveness and commercial success. (CATAAlliance)

Ottawa, ON...CATAAlliance (www.cata.ca) a recognized champion of Canadian innovation and entrepreneurship has called on the new Liberal Government to reconsider 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 as part of helping to advance Canada's innovation and competitiveness ranking to number one from middle of the pack.

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.

It is unclear whether this would apply to just non-CCPCs (Canadian-Controlled Private Corporations), or both CCPCs and non-CCPCs. The Alliance is advocating for no change as a positive change.

In an earlier release, CATAAlliance congratulated the Minister of Finance for assurances that any proposed changes would be grandfathered and only changes would be made after consultations with the community.

CATA CEO, John Reid said, "Changing the stock option dynamic in any way is the wrong path to attracting and keeping talent, at a time when our community is looking for all ways to move Canada to number one ranking for innovation,competitiveness 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 WHITEPAPER

Download White Paper on "Will Tax Treatment for Canadian Stock Options Change?"
(Davies Ward Phillips & Vineberg LLP) at:
https://drive.google.com/file/d/0B__wzrAC_E12d0NOcXRlRXRudlU/view?usp=sharing

View CEO Stock Option interviews on the CATA ESOP (Employee Stock Option) video sharing Channel.

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 new government needs to re-evaluate its stock option proposal 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. No change is a positive step for the nation's innovation economy".

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CATA has released a seven-point working agenda for advancing Canada's Innovation and competitiveness rankings. Ideas and guidance were crowdsourced from the CATA Social Media Groups across the nation and in key global markets.

About CATAAlliance

Interact with your Innovation Peer Group Now http://www.linkedin.com/groups/Canadian-Advanced-Technology-Alliance-CATA-37239/about

The Canadian Advanced Technology Alliance (CATAAlliance) is Canada's One Voice for Innovation Lobby Group, 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)