Aksje Alternativer Ccpc

Jeg har jobbet for et lite kanadisk kontrollert privat selskap (CCPC) og ble tilbudt aksjer i det selskapet at det kan være skattemessige konsekvenser dersom aksjene er innløst av selskapet. Små selskaper, som store selskaper, vil ofte tillate nøkkelpersoner å kjøpe aksjer i aksjeselskapet slik at nøkkelpersoner kan dele i overskuddet i selskapet. Da fortjeneste er opptjent, blir de distribuert til alle aksjonærer basert på deres eierandeler. Disse distribusjonene skatter normalt som utbytte i aksjonærene. Salg av aksjer er ofte begrenset. Lagrene av små selskaper kan ikke selges på børser og aksjonæravtaler begrenser ofte til hvem aksjene kan selges til (normalt andre eksisterende aksjonærer). Som et resultat, hvis det kreves midler fra aksjonæren eller om aksjonæren slår opp med selskapet, og kvalifisert kjøper ikke er tilgjengelig, kan selskapet innløse aksjene til en angitt pris. På forsiden av det høres det ut som om du er redd hvis du kan finne en kvalifisert kjøper. Men skattebehandlingen av en aksjeinnløsning kan være svært forskjellig fra et salg av aksjer til en annen person. John var ansatt hos Investco Ltd. og ble invitert til å kjøpe aksjer i selskapet som en belønning for god service. Aksjeavtalen begrenser omsalg av aksjene utstedt til andre kvalifiserte ansatte i Investco. Som et alternativ vil Investco innløse aksjene til virkelig verdi ved bruk av en foreskrevet verdsettelsesformel. John kjøpte 1500 aksjer i 2004 for 100 hver. Den opptjente kapitalen (PUC) av disse aksjene var også 10 hver. I 2008 forlot John selskapet og markedsverdien av aksjene hadde vokst til 400 hver. John8217s marginalskattesats er 45 på normal inntekt, 22,5 på gevinst, 33,33 på utvinnbar utbytte og har aldri hevdet noen gevinster eller tap i fortiden. På den tiden var Investco en CCPC og et kvalifisert småbedriftsforetak. Selskapet har ikke en GRIP-saldo, og derfor vil alle utbytter anses å være uberettigede. Scenario A 8211 Salg av andeler til en tredjepart Dersom en kvalifisert aksjonær var tilgjengelig for å kjøpe aksjene, og antatt at aksjonæren ikke er knyttet til John og Investco, er skattemessige konsekvenser av salget som følger: John vil realisere en gevinster av 1.500 aksjer x (400-100) 450.000. Siden Investco er et kvalifisert småbedriftsforetak og kapitalgevinsten er mindre enn 750.000 levetidsgevinstfritak, er det ingen skattemessige konsekvenser. Scenario B 8211 Investco Redeems Aksjene for 400 hver Hvis John ikke finner en kjøper og Investco innløser aksjene, ser inntektsskatteloven seg på transaksjonen annerledes: Innløsningen på 400 per aksje gir et utbytte på 1500 x (400 8211 10) 585.000. Marginalskatten på det ikke-kvalifiserte utbyttet vil være 195 000. Innløsningen resulterer også i skattepliktige tap på 67 500 som kan kvalifisere, er et tillatelig investeringsstap (ABIL) og kan være fradragsberettiget mot annen inntekt. Hvis tapet var en ABIL, ville de realiserte skattebesparelsene være 30.375. Totalskatten, forutsatt at ABIL kan bli fullt ut hevdet, ville være 164.625. Det skattepliktige kapital tapet er inntektene på innløsningen til 600 000 kroner mindre det anslåtte utbytte på 585 000, med fradrag av aksjonærenes justerte kostnadsgrunnlag på 150 000 ganger 50. Det er klart at et armlengdesalg av aksjene er et bedre resultat, da det ville unngå den vurderte utbytte. Jeg forstår en liten mengde av mitt eget scenario, og håpet du kunne hjelpe meg med å sette meg rett på resten. Min mann kjøpte 100.000 dollar (eller 5) aksjer i det lille selskapet han jobber for. Vi tok ut et forretningslån på 80.000 for å gjøre dette. Vi har betalt kapitalgevinster på eventuell inntekt realisert med aksjene. Nå8230 mitt spørsmål er this8230 Hvis vi skulle selge aksjene tilbake til selskapet ville vi betale skatt på pengene skyldte oss selv om FMV ikke hadde endret å gjøre aksjene verdt samme beløp ved opprinnelig kjøp Vi betalte ikke noe på lånet bortsett fra renter som dette ble alle avskrevet som en forretningsomkostning på skattetid, slik at lånet på 80.000 fortsatt skyldes banken. Jeg er i tvil om vår beslutning om å inngå denne avtalen om kjøp fordi hvis vi må betale skatt på det eksakte beløpet vi kjøpte, ser det ut til at det var et veldig smart kjøp til slutt fordi vi fortsatt skylder banken 80 000, og vi ville har skatt til å betale på 80.000 rec8217d fra salg av aksjer tilbake til selskapet som ville bety at vi har mistet penger til slutt. Situasjonen i kontakten sier at aksjene vil bli kjøpt tilbake av arbeidsgivere av selskapet. Men det angir ikke om scenariet hvor dette ville være selskapet som betaler dette ut eller eieren (han er beskrevet som majoritetsaksjonær). Det er bare 3 aksjonærer innenfor dette oppsettet. Eieren har 85. En annen ansatt holder 10 og mannen min holder 5. Jeg håper jeg har gitt nok informasjon til deg. Takk så mye. Kapitalgevinster utløses når du selger aksjer i selskapet. Ellers var inntektene sannsynlig utbytte. Med mindre du eier fast verdiverdier, er det usannsynlig at FMV har holdt seg det samme. Hvorvidt selskapet innløser aksjene, eller de blir solgt til en annen aksjonær, er skatten på GAIN, ikke på investeringen. Husk gevinst eller tap er det du får mindre hva du betalte meg og min ektefelle begge egne 50 aksjer i en CCPC. Selskapet mister. Jeg vil gjerne overføre mine 50 aksjer til min ektefelle på 1. Hva trenger jeg å gjøre for det, vennligst veiledning. Kan vi bare skrive på et orddokument at jeg selger aksjene til ham. Hvilke myndigheter trenger vi å informere om endringen. Jeg har lest din artikkel om salg av aksjer i et selskap og finner at jeg er litt forvirret, så jeg trodde jeg skulle stille et spørsmål. Venner startet et selskap for 5 år siden og har innsett at de ikke lenger er venner. En aksjeeier ville bare den andre ut, så betalte en pris som tilfredsstilte ønskene til sin tidligere partner. Er beløpet som mottas av den tidligere partneren, kvalifisert for kapitalgevinstfritak. Vennene er ikke relaterte og konsernet er CCPC. Takk for din innsats. Lee, The Capital Gains-fritak kan bare hevdes dersom noen betingelser ble oppfylt. Denne artikkelen snakker om det. Har klient som nylig har skilt fra kone. Som en del av skilsmisse ønsker kona ingen del av virksomheten. Hva er den beste måten å avhende aksjene på (selg tilbake til samarbeid for 1, kansellere aksjer osv.) Som ville ha minst skattemessige konsekvenser. Det finnes en rekke muligheter. 1. Ektemann kjøper aksjer fra kone til kostpris før separasjonsdatoen og forhandler deretter om andre eiendeler som en annen avtale. Ingen skatt før eller etter. Spousal rollover før separasjon uten skatt. 2. Ektemann kjøper aksjer etter separasjon. Forutsatt at aksjer er kvalifiserte småforetak aksjer, kan hun kreve kapitalgevinster unntak. I scenariene ovenfor gir ikke aksjeselskapet penger fordi det er en transaksjon mellom aksjonærene. Hvis det ikke er noen CGE for alternativ 2, kjøper ektemann aksjer og kone tar et notat betales. Hun kunne spre gevinsten over en rekke år. 3. Korporasjon innløser aksjer på en gang. Fortatt utbytte og noen avgifter. Selskapet må ha penger eller eiendeler for å avgjøre innløsningen. Som et alternativ kan aksjene innløses over tid. I8217m ikke sikker på at du kan hjelpe, men hvis jeg jobber for en CCPC og gikk gjennom en delinnløsning i 2012 i Quebec, er min forståelse at det er føderalt beskattet etter en 50 fradrag, men provinsielt etter bare 25 fradrag. Vet du om that8217s true Bakgrunnen er at jeg ble tildelt aksjer til en bestemt pris, og i fjor ble disse aksjene kjøpt tilbake av selskapet for et overskudd. Skulle de pengene bli rapportert som en kapitalgevinst eller som en ansettelsesavgift 50 ville være inkluderingsfrekvensen for kapitalgevinster (I8217m ikke shure hvor 25 for Quebec kom fra). Men når et selskap innløser eller kjøper aksjene tilbake, betales betalingen som utbytte, og skattebehandlingen kan være forskjellig. Hei, ha en lignende situasjon. Jeg har betalt aksjer 20 tilbake i 2011 til mitt private selskap (jeg er en ansatt i et privat kanadisk selskap (som ikke kvalifiserer for små bedrifter) per aksje for 100 aksjer (20 x 1000 20 000). Min forståelse er at 20 er også I likhet med PUC på det tidspunktet (i motsetning til ditt eksempel over hvor 100 er forskjellig fra 10), er det i det minste alt jeg vet jeg betalt 20 per aksje. I 2012 og 2013 mottok jeg en kapitalavkastning på 4 i hvert år. forlot selskapet ved utgangen av 2013, og så var aksjene mine innløst av selskapet til 15 (selskapsverdi gikk faktisk ned over 2 år). Selskapet mitt sendte meg bare en 2013 T5 for utbytte for 3 per aksje (innløs pris mindre PUC : 15 8211 (20 8211 8)), forlater jeg utbyttet av utbytte for den skattepliktig delen og kreditt siden dette ikke er poenget med mitt spørsmål. Så jeg forstår at jeg må rapportere dette 3 utbytte (jeg har en T5 for det), men trenger jeg å skrive inn noe i min avkastning for kapitalgevinst ved å ta hensyn til noe ACB er min ACB-stil l 20 og jeg burde kreve et tap på 5 (15 8211 20 -5) PUC og ACB her forvirrer meg8230 Takk på forhånd for hjelp, PUC og ACB er forskjellige. ACB er det du betalte for aksjene, mens PUC er den juridiske utstedte kapitalen i selskapet.2016 Federal budsjett Den 22. mars 2016 presenterte forbundsfinansminister Bill Morneau de nye flertallsregjeringer første budsjett. Denne skatteinnsatsen drøfter skatteinitiativene som foreslås i budsjettet. Også 22. mars 2016, men etter utgivelsen av Canadas budsjett, uttalte finansminister Morneau at regjeringen ikke vil fortsette med sin plan om å begrense den gunstige skattebehandlingen av opsjoner. Bedriftsskatteforanstaltninger Gjennomgå skattesystemet I det kommende året vil regjeringen gjennomføre en gjennomgang av skattesystemet for å avgjøre om det fungerer bra for kanadiere med sikte på å eliminere dårlig målrettede og ineffektive skatteforanstaltninger. Spesielt regjeringen er opptatt av muligheten til høyverdienes enkeltpersoner til å bruke private selskaper til uhensiktsmessig å redusere eller utsette skatt. Small Business Tax Rate Budsjettet foreslår at reduksjoner i småbedriftsskattesatsen som nå er lovgilt i 2017, 2018 og 2019, blir utsatt. Følgelig vil skattesatsen for småbedrifter forbli til 10,5 etter 2016, og den nåværende opptjeningsfaktoren og utbytteskattesatsen på ikke-kvalifisert utbytte vil bli opprettholdt for å bevare integrerte skattesatser. Multiplikasjon av Small Business Deduction Det småbedriftsfradrag (SBD) som et kanadisk kontrollert privat selskap (CCPC) kan kreve med hensyn til inntekt fra et partnerskap, er begrenset til den minste av den aktive forretningsinntekt som den mottar som medlem av partnerskapet og dets pro rata andel av en ideell 500 000 forretningsgrense fastsatt på partnerskapsnivå. Enkelte skattebetalere har fått ytterligere tilgang til SBD ved å etablere en struktur der aksjonæren til en CCPC (og ikke selve KKPC) er medlem av et partnerskap, og KKPC tjener avgifter fra partnerskapet under en kontrakt for tjenester, slik at KKPC kan potensielt hevde en full SBD med hensyn til inntekt opptjent fra partnerskapet. I skatteår som begynner etter 21. mars 2016 foreslår budsjettet å ta opp denne skatteplanleggingen ved å utvide gjeldende regler for å fange opp situasjoner hvor en CCPC leverer tjenester eller eiendom direkte eller indirekte til et partnerskap. Lignende planlegging kan også oppnås for øyeblikket gjennom bruk av et selskap i stedet for et partnerskap hvor selskapet gir tjenester eller eiendom til et annet privat selskap. Budsjettet foreslår endringer slik at en CCPC ikke vil være berettiget til mindre virksomhetsfradrag på inntekter fra å levere tjenester eller eiendom direkte eller indirekte til et annet privat selskap der når som helst i et skatteår, KKPC, en av sine aksjonærer eller en person Det handler ikke om armlengder når aksjonæren har en direkte eller indirekte interesse i det private selskapet. Denne regelen gjelder ikke dersom alle eller vesentlig alle KKPCs aktiv forretningsinntekt er opptjent fra å levere tjenester eller eiendom til andre personer enn andre enn det private selskapet. Unngåelse av forretningsbegrensning og skattepliktig grenseverdi i henhold til underskrift 256 (2) i inntektsskatteloven (ITA), to KKPCer som ikke ellers ville være tilknyttet, vil bli behandlet som tilknyttet hvis hver av selskapene er knyttet til samme tredje selskap. Når paragraf 256 (2) gjelder, må de tre KKPCene dele 500 000 SBD og den 15 millioner skattepliktige kapitalgrensen (TCL). Det tredje selskapet kan imidlertid legge inn valg etter underpunkt 256 (2) for ikke å være knyttet til de to andre. Hvis dette valget er arkivert, kan det tredje selskap ikke kreve SBD, men de to andre selskapene kan hver påstå SBD-emnet til eget TCL. I henhold til nr. 129 (6) behandles en CCPCs investeringsinntekt som aktiv forretningsinntekt som er kvalifisert for SBD dersom denne inntekten er hentet fra en tilknyttet selskaps virksomhet. Associert selskaps status i henhold til § 129 nr. 6 er imidlertid ikke berørt av et valg i underavdeling 256 (2), noe som kan resultere i en situasjon hvor de to andre selskapene hver påstår SBD på investeringsinntekter fra den aktive virksomheten av det tredje selskapet, selv om det tredje selskapet ikke kunne ha hevdet SBD. For skatteår som begynner etter 21. mars 2016, foreslår budsjettet endringer for å sikre at der hvor det velges underpunkt 256 (2) valg: Investeringsinntekter fra en tilknyttet selskaps aktiv virksomhet vil ikke være kvalifisert for SBD og vil bli beskattet ved generell selskapsskattesats tredje selskap vil fortsette å være tilknyttet hver av de to andre selskapene med det formål å anvende TCL-konsultasjonen om aktiv vs. investeringsvirksomhet etter konsultasjoner i 2015, bekrefter budsjettet regjeringer som har til hensikt å opprettholde en regel om at hvor en CCPC har hovedformålet med å tjene inntekt fra eiendom, kan det være berettiget til mindre virksomhetsfradrag hvis det har mer enn fem heltidsansatte. Livsforsikringspolitikk Fordelene for livsforsikring oppnås Livsforsikringsprovenu mottatt som følge av død av en forsikret person i en livsforsikring er generelt ikke skattepliktige. Budsjettet foreslår et tiltak for å sikre at livsforsikringsprovenu mottatt i et privat selskap eller et partnerskap ikke gir opphav til upassende tillegg til kapitalutbyttekontoen (i tilfelle av et privat selskap) eller justert kostnadsbase (i tilfelle av en samarbeid). Tiltaket vil også innføre krav til informasjonskrav som vil gjelde der et selskap eller et partnerskap ikke er forsikringstaker, men har rett til å motta en pensjonsytelse. Dette tiltaket gjelder for de politiske fordelene som er mottatt som følge av en død som oppstår etter 21. mars 2016. Overføringer av livsforsikringspolitikk Budsjettet foreslår endringer for å forhindre upassende skattefordeler i situasjoner når en livsforsikring overføres til et privat selskap eller partnerskap på roll-over basis. I virkeligheten forhindrer foranstaltningen skattebetalere i å trekke ut merverdien av den rettferdige markedsverdien av en politikk overført til et aksjeselskap eller partnerskap over sin overgivelsesverdi som en skattefri fordel når politikken overføres til et aksjeselskap eller partnerskap. Dette tiltaket gjelder for disposisjoner som oppstår etter 21. mars 2016. En tilsvarende tiltak vil gjelde for å redusere beløpet lagt til en kapitalutbyttekonto, innbetalt kapital og justert kostnadsgrunnlag når en policy ble overført til et selskap eller et partnerskap før 22. mars 2016. Kvalifisert kapitaleiendom (ECP) Budsjettet foreslår å oppheve ECP-regimet og erstatte det med en ny kapitalkompensasjon (CCA) - basseng. Opphevelsen av ECP-regimet ble omtalt i 2014-budsjettet. Disse endringene er ment å forenkle reglene knyttet til immaterielle egenskaper. Under dagens system inngår 75 av støtteberettigede investeringer (for eksempel kundelister, lisenser, franchise rettigheter, farmakvoter og oppkjøp av goodwill) i en kumulativ kvalifisert kapital (CEC) - basseng. Et fradrag kan hevdes til en pris på 7 per år på et synkende balansegrunnlag. Opptil 75 av inntektene mottatt ved disposisjon av ECP reduserer CEC-bassenget. Hvis kvitteringene overskrider CEC-bassenget, tar overskudd først tilbake eventuelle tidligere fradrag. Resten er inkludert i næringsinntekt med en 50 inkluderingsrate. Under de foreslåtte reglene vil en ny CCA, klasse 14.1 bli introdusert. Fra 1. januar 2017 vil 100 av utgifter som tidligere hadde blitt inkludert i CEC-bassenget bli inkludert i denne klassen. Avskrivningsgraden vil bli 5 (fallende balanse). Reglene som gjelder for avskrivbar eiendom, for eksempel halvårsregelen, gjenfangst og kapitalgevinst, gjelder for eiendommene som inngår i denne klassen. Spesielle regler gjelder for utgifter som ikke er relatert til en bestemt eiendom i en bedrift. Hver virksomhet vil bli vurdert å ha goodwill knyttet til den (selv om det ikke er foretatt utgifter til goodwill). Utgifter som ikke relaterer seg til en bestemt eiendom, vil øke kapitalkostnaden til forretningsvirksomheten og dermed balansen i klasse 14.1-bassenget. Et kvittering som ikke vedrører en bestemt eiendom vil redusere kapitalkostnaden til virksomhetenes goodwill, og dermed balansen i klasse 14.1-bassenget, med det minste av kostnaden for goodwill (som kan være null) og beløpet av kvitteringen. Eventuelt overskudd vil bli behandlet som en gevinst. Eventuell tidligere trukket CCA vil bli innhentet i den grad kvitteringen overstiger balansen i klasse 14.1 bassenget. CEC-saldoer vil bli overført til det nye klasse 14.1-bassenget pr. 1. januar 2017, inkludert for skattebetalere hvis skatteår strekker seg fra 1. januar 2017. Åpningsbalansen for klasse 14. 1-bassenget vil være lik CEC-balansen per desember 31, 2016. CCA-avskrivningsgraden for eiendommer som inngår i klasse 14.1-bassenget relatert til utgifter påløpt før 1. januar 2017, vil være 7 til 2027. For beløp mottatt på disposisjon av eiendom etter 31. desember 2016, som vedrører eiendom anskaffet eller utgifter gjort før 1. januar 2017, vil redusere klasse 14.1 bassenget til en 75 rate. Også inkludert for 75 rate, er kvitteringer som ikke representerer inntektene på disposisjon av eiendom. For å forenkle overgangen foreslår budsjettet spesielle regler for små bedrifter som tillater fradrag: for utgifter som påløper før 2017, lik den største på 500 og beløpet som ellers er fradragsberettiget for året, i år som slutter før 2027, og i databehandling Inntekt for de første 3.000 inkorporeringskostnadene Gjeldsparkering for å unngå valutavekster Gjeldsparkeringsreglene omhandler for tiden bruken av teknikker for å unngå anvendelse av gjeldsgivningsregler, men ta ikke hensyn til valutakursgevinster for skyldneren i bestemme en tilgitt mengde. Budsjettet foreslår å innføre regler slik at eventuelle påløpte valutagevinster på en gjeld i utenlandsk valuta vil bli realisert når gjelden blir en parkert forpliktelse. Debitor vil bli ansett å ha gjort gevinsten, hvis noe annet ville ha gjort dersom den hadde betalt et beløp (uttrykt i valutaen hvor gjelden er denominert) til tilfredsstillelse av hovedbeløpet av gjelden lik: når gjelden blir en parkert forpliktelse som følge av oppkjøpet av den nåværende innehaveren, vil beløpet for hvilken gjelden ble anskaffet, og i andre tilfeller den virkelige markedsverdien av gjelden. For dette formål vil en gjeld i utenlandsk valuta bli en parkert forpliktelse til enhver tid hvis: den nåværende gjeldsinnehaver ikke på det tidspunkt håndterer gjeldslengden med debitor eller, når debitor er et selskap, har en betydelig interesse (eier aksjer i selskapet sammen med ikke - personer med armerelengde, hvorav 25 eller flere av stemmene eller verdien kan tilskrives) i selskapet, og til enhver tid, en person som holdt gjelden håndtert i armlengden med debitoren, og når skyldneren er et selskap, gjorde ikke ha en betydelig interesse i th e corporation Unntak vil sikre at en gjeld i utenlandsk valuta ikke vil bli en parkert forpliktelse i sammenheng med visse bona fide kommersielle transaksjoner. Tilknyttede regler vil gi lettelse til økonomisk forstyrrede debitorer. Dette tiltaket gjelder for en gjeld i utenlandsk valuta som oppfyller vilkårene for å bli en parkert forpliktelse etter 21. mars 2016. Et unntak gjelder dersom disse vilkårene er oppfylt før 2017 og følger av en skriftlig avtale inngått før 22. mars 2016. Tilbake - til-tilbakebetalingsregler: Aksjeselskapslån De foreslåtte endringene som beskrevet i avsnittet Internasjonal skattemåling nedenfor, kan også gjelde for innenlandske situasjoner. Verdivurdering av derivater I henhold til relevant rettspraksis kan en skattebetalers interesse for visse derivater på inntektskonto behandles som beholdning som kan verdsettes til laveste av opprinnelig kostpris og rettferdig markedsverdi, slik at verdifall kan fratrukket før realisering. Budsjettet foreslår en regel som vil betrakte en skattebetalers eiendom som er en swap-avtale, en forward-kjøps - eller salgsavtale, en terminsavtale, en opsjonsavtale eller en lignende avtale som ikke er inventar av skattebetaleren i henhold til disse verdivurderingsreglene . En ledsagende regel vil også forhindre at en skattyter nedskriver derivatene til det minste av kostbar og rettferdig markedsverdi under generelle prinsipper for inntektsberegning for skattemessige formål. Reglene er effektive for derivater inngått etter 21. mars 2016. Accelerert CCA for ladestasjoner for elektrisk kjøretøy og lagringsegenskaper for elektriske energikilder Klassene 43.1 og 43.2 gir hastighetskvoter (CCA) (henholdsvis 30 og 50, balansegrunnlag) for investeringer i spesifisert rentgenererings - og bevaringsutstyr. Budsjettet utvider klassene 43.1 og 43.2, for å inkludere: kvalifiserte ladestasjoner for elektrisk kjøretøy klasse 43.2 hvis de er satt opp for å levere minst 90 kilowatt kontinuerlig kraft og klasse 43.1 hvis de er satt opp for å levere mer enn 10 kilowatt, men mindre enn 90 kilowatt kontinuerlig kraft kvalifisert stand-alone elektrisk energi lagrings eiendom klasse 43.1 hvis rundtur effektivitet (dvs. hvor mye energi vedlikeholdes i prosessen med å konvertere elektrisitet til en annen form for energi og deretter tilbake til strøm) av utstyret er større enn 50 i tillegg , budsjettet klargjør og utvider rekkevidden av elektrisk energilagringseiendom som kvalifiserer for klasse 43.2 eller klasse 43.1, til et bredt spekter av kort - og langtidslagringsutstyr som er tilknyttet kvalifisert produksjonsutstyr. Hvis lagringsutstyret er en del av et elektrisitetsgenereringssystem som er kvalifisert for: Klasse 43.2 (f. eks. Et godkjent fornybart, avfallsdrevet eller høyeffektiv kraftvarmeproduksjonssystem), vil det bli inkludert i klasse 43.2 klasse 43.1 (dvs. en kraftig kraftvarmeproduksjon systemet), vil det bli inkludert i klasse 43.1 Tiltakene gjelder for eiendom som er oppkjøpt for bruk etter 21. mars 2016, og som ikke er brukt eller ervervet til bruk før 22. mars 2016. Emissionshandelsregimer Under utslippshandelsregimer regulert Emittere må levere utslippskvoter til regjeringen. Disse kvotene kan kjøpes av emittenter, opptjent i utslippsreduksjonsaktiviteter eller leveres av myndighetene til nedsatt pris eller uten kostnad. For tiden eksisterer det ingen spesifikke skatteregler for å håndtere utslippshandlingsregimer. Budsjettet foreslår å innføre spesifikke regler for å avklare skattebehandlingen av utslippskvoter og å eliminere dobbeltbeskatning av visse gratis kvoter. Spesielt vil utslippskvoter bli behandlet som inventar for alle skattebetalere, men den laveste av kost - og markedsmetoden kan ikke brukes til å verdsette beholdningen. Dersom det mottas gratis godtgjørelse, vil det ikke være inntektsinntekt ved mottak av godtgjørelsen. I tillegg vil fradraget for en påløpt utslippsforpliktelse være begrenset i den grad forpliktelsen overstiger kostnaden for utslippsutgifter som skattebetaleren har kjøpt, og som kan benyttes til å avgjøre forpliktelsen. Dersom det kreves fradrag for en utslippsforpliktelse som påløper i ett år (for eksempel 2017) og som vil bli tilfredsstilt i et kommende år (for eksempel 2018), vil beløpet av dette fradraget bli inntektsført i Det påfølgende året (2018) og skattebetaleren vil bli pålagt å vurdere fradragsberettigelsen igjen hvert år, til det til slutt er tilfredsstillende. Hvis en skattyter disponerer over en utslippstillatelse ellers enn under utslippsutbetalingsordningen, vil eventuelle inntekter som overstiger skattebetalernes kostnader, om noen, for godtgjørelsen bli inkludert i beregningsinntektene. Tiltakene vil gjelde for utslippstillatelser som er oppnådd i skatteår som begynner etter 2016, og valgfritt for utslippstillatelser som ervervet i skatteår som slutter etter 2012. Internasjonal skattemåling Base Erosion and Profit Shifting (BEPS) Måler Canada har vært en aktiv deltaker i BEPS-handlingsplanen, et prosjekt fra Organisasjonen for økonomisk samarbeid og utvikling (OECD) og G-20. BEPS refererer til skatteplanleggingsstrategier som utnytter hull og mangler i nasjonale skattelov til å skifte overskudd til lave eller ingen skattemessige steder. Budsjettet indikerer at regjeringen har til hensikt å handle på følgende anbefalinger fra OECD BEPS-prosjektet. Innføring av rapportering fra land til land (CbCR) Tiltak 13 i OECDs BEPS-prosjekt omhandler overføringspriser for dokumentasjonskrav for multinasjonale foretak (MNE). Den 5. oktober 2015 utgav OECD sin endelige leveranse på disse kravene, som bekrefter sine anbefalinger for en tre-trinns tilnærming til dokumentasjon: en hovedfil (i hovedsak en oversikt over MNE) som skal arkiveres i foreldrenes jurisdiksjon a lokal fil som skal arkiveres av den lokale enheten i den jurisdiksjonen den driver for å forsvare prisingen av sine intercompany-transaksjoner (merk at mye av informasjonen i den lokale filen allerede er nødvendig under Canadas ITA) og en rapport for land for land arkivert av foreldre i sin bosteds jurisdiksjon. Rapporten vil inneholde viktige beregninger for hvert land som MNE opererer i, for eksempel: Inntekter, fortjeneste, skatt betalt, oppgitt kapital, akkumulert inntjening, antall ansatte, materielle eiendeler samt en beskrivelse av hovedaktiviteten til hvert av datterselskapene . OECD lanserte også en gjennomføringspakke relatert til disse nye kravene, som inkluderer tre modell kompetente myndighetsavtaler for å lette utvekslingen av disse land-for-land-rapportene. Mange land har allerede implementert disse kravene, særlig USA utstedte foreslåtte forskrifter for å implementere CbCR 21. desember 2015. Budsjettet foreslår å kreve CbCR for skatteår som begynner etter 2015 for kanadiske MNEs med total konserninterne konsernomsetning på 750 millioner euro eller mer. Denne rapporteringen vil være forfalt innen ett år etter utgangen av regnskapsåret som rapporten vedrører med en oppfatning at de første utvekslingene mellom jurisdiksjoner av land for land-rapporter skulle skje innen juni 2018. Før noen utveksling av informasjon med annen jurisdiksjon, Canada Revenue Agency (CRA) vil formalisere et utvekslingsarrangement med den andre jurisdiksjonen og vil sørge for at den har hensiktsmessige garantier for å beskytte konfidensialiteten til rapportene. Utkast til lovforslag om å gjennomføre disse reglene vil bli utgitt for kommentar i de kommende månedene. Revidert overføringsprisveiledning CRA vil anvende den reviderte internasjonale veiledningen om overføringsprising av multinasjonale foretak som stammer fra BEPS-prosjektet. Regjeringens oppfatning er at de reviderte retningslinjene for overføring av priser generelt er i samsvar med de aktuelle tilsynsforskrifterens nåværende tolkning og anvendelse av armlengdes prinsippet, derfor forventes dagens praksis ikke å endre seg vesentlig. Kredittilsynet vil ikke justere sin administrative praksis knyttet til lav verdiøkende tjenester og risikofri og risikojustert avkastning for minimalt funksjonelle enheter (ofte kalt kassebokser) til BEPS-prosjektet oppfølgingsarbeid på disse områdene er fullført . Den endelige BEPS-leveransen i forbindelse med trakthandler (Handling 6) krever at hvert deltakerland skal vedta minimumsstandarder for å motvirke traktatbrudd. Den endelige handlingsrapporten 6 ga fleksibilitet i hvordan disse minimumsstandardene kunne bli oppfylt, slik at det var åpent for land for å møte dem gjennom traktatbestemmelser eller gjennom alminnelige generelle eller spesifikke anti-unngåringsregler, men i rapporten blir det klart at avtalepartnere må ha en felles intensjon Ikke å skape muligheter for dobbel ikke-beskatning gjennom avtaler om å handle. I mellomtiden har arbeidet med et multilateralt instrument fortsatt, med over 90 stater som deltar i utviklingen av instrumentet med sikte på å ha et fastsettende instrument innen utgangen av 2016. Budsjettet bekrefter regjeringens forpliktelse til å takle traktatbrudd i samsvar med minimumsstandarden som er nevnt ovenfor. Regjeringen vil vurdere enten minimal standard tilnærming, avhengig av de spesielle omstendighetene og diskusjonene med Canadas skatteavtale partnere. Budsjettet indikerer også at Canadas skatteavtaler kan endres for å inkludere en regel om misbruk av misbruk gjennom bilaterale forhandlinger, det multilaterale instrumentet eller en kombinasjon av de to. Spontan utveksling av skattebestemmelser Budsjettet bekrefter regjeringens intensjon om å implementere BEPS-minimumsstandarden for spontan utveksling av visse skattemessige avgjørelser som kan føre til BEPS-bekymringer. Kredittilsynet vil begynne å utveksle skattemessige avgjørelser i 2016 med andre jurisdiksjoner som har forpliktet seg til minimumsstandarden. Regjeringen fortsetter å undersøke de andre anbefalingene i BEPS-prosjektets endelige rapporter utstedt 5. oktober 2015. Videre gjenoppretter det sitt engasjement for BEPS-prosjektet og dets ønske om å samarbeide med det internasjonale samfunn for å sikre en sammenhengende og konsistent respons på BEPS. Grenseoverskridende strykning ITA inneholder en anti-overskuddsbestemmelsesregel (§ 212.1) som kan gjelde når aksjer i et kanadisk selskap (fagforetaket) avhendes av en ikke-hjemmehørende person (eller utpekt partnerskap) til et annet selskap bosatt i Canada (det kanadiske kjøperselskapet) som den ikke-hjemmehørende personen ikke håndterer med armlengden. The rule is intended to prevent the tax-free receipt by the non-resident person of amounts representing retained earnings (or surplus) in excess of the paid-up capital (PUC) of the subject corporation shares as proceeds of disposition. When applicable, this rule results in a deemed dividend to the non-resident person or a suppression of the PUC of shares that would otherwise have been increased as a result of the transaction. An exception to this anti-surplus-stripping rule is found in subsection 212.1(4). It ensures the anti-surplus stripping rule does not apply in respect of a disposition by a non-resident person of shares of a Canadian subject corporation to a Canadian purchaser corporation where, immediately before the disposition, the Canadian corporation purchasing the shares controlled the non-resident person. This exception could apply in situations where the non-resident person is sandwiched between two Canadian corporations and the non-resident corporation disposes of the shares of the lower-tier Canadian corporation to the Canadian parent corporation (effectively, unwinding the sandwich structure). The budget proposes to amend the exception in subsection 212.1(4) to ensure that it does not apply when a non-resident corporation both (i) owns, directly or indirectly, shares of the Canadian purchaser corporation, and (ii) does not deal at arms length with the Canadian purchaser corporation. The government also indicates that it will continue to challenge certain transactions undertaken before March 22, 2016, by taxpayers that rely on the application of subsection 212.1(4). The government views the changes to the application of this exception as clarifying the intended scope of the existing rules. Further, to address situations where it may be uncertain whether consideration has been received by a non-resident person from the Canadian purchaser corporation in respect of the disposition by the non-resident person of shares of the lower-tier Canadian corporation, the budget proposes to deem the non-resident to receive non-share consideration from the Canadian purchaser corporation in such situations. The amount of this deemed consideration will be determined by reference to the fair market value of the shares of the lower-tier Canadian corporation received by the Canadian purchaser corporation. The measures will apply in respect of dispositions occurring after March 21, 2016. Extension of the Back-to-Back Rules Back-to-Back Rules for Rent, Royalties and Similar Payments Part XIII of the ITA generally imposes a 25 withholding tax on cross-border payments of rents, royalties or similar payments (collectively referred to as royalties) made by Canadian-resident persons to non-residents. This 25 withholding tax rate is often reduced by a tax treaty. Some taxpayers use an intermediary entity located in a favourable tax treaty country for the payment of those royalties. The budget proposes to address these back-to-back arrangements by extending the basic concepts of the back-to-back loan rules under Part XIII to royalty payments made after 2016. When they apply, the proposed rules for royalty payments will deem the Canadian-resident payor to have made a royalty payment directly to the ultimate non-resident recipient, and an amount of withholding tax, equal to the amount of withholding tax otherwise avoided as a result of the back-to-back arrangement, will become payable on the deemed royalty payment. Character Substitution Rules The budget proposes to extend the back-to-back rules in Part XIII to prevent their avoidance through the substitution of economically similar arrangements between the intermediary and another non-resident person. Specifically, a back-to-back arrangement may exist in situations when: interest is paid by a Canadian-resident person to an intermediary and there is an agreement that provides payments in respect of royalties between the intermediary and a non-resident person royalties are paid by a Canadian-resident person to an intermediary and there is a loan between the intermediary and a non-resident person, or interest or royalties are paid by a Canadian-resident person to an intermediary and a non-resident person holds shares of the intermediary that include certain obligations to pay dividends or that satisfy certain other conditions (e. g. they are redeemable or cancellable) Under these proposed character substitution rules, a back-to-back arrangement will exist when a sufficient connection is established between the arrangement under which an interest or royalty payment is made from Canada and the intermediarys obligations in each of the three situations described above. This measure will apply to interest and royalty payments made after 2016. Back-to-Back Shareholder Loan Rules The budget proposes to amend the shareholder loan rules to include rules that are similar to the existing back-to-back loans rules, except that the proposed rules will apply to debts owing to Canadian-resident corporations rather than debts owing by Canadian-resident taxpayers. A back-to-back shareholder loan arrangement will be considered to exist when an intermediary that is not connected with the shareholder, is owed an amount by the shareholder and the intermediary owes an amount to the Canadian corporation and there is a link between the two obligations (certain conditions must be met). If the proposed rules apply in respect of a debt owing by a shareholder of a Canadian-resident corporation, the shareholder will be deemed to be indebted directly to the corporation. This measure will apply to back-to-back shareholder loan arrangements as of March 22, 2016. For back-to-back shareholder loan arrangements that are in place on March 22, 2016, the deemed indebtedness will be deemed to have become owing on March 22, 2016. The budget proposes to clarify the application of the existing back-to-back rules in Part XIII to back-to-back arrangements involving multiple intermediaries. The proposed back-to-back rules for royalty payments will also apply to multiple-intermediary back-to-back arrangements. Under these proposed rules, a back-to-back arrangement will comprise all the arrangements that are sufficiently connected to the arrangement under which a Canadian resident makes a cross-border payment of interest or royalties to an intermediary. When a back-to-back arrangement involving multiple intermediaries exists, an additional payment (of the same character as that paid by the Canadian resident to the first intermediary) will be deemed to have been paid directly by the Canadian resident to the ultimate non-resident recipient in a chain of connected arrangements. The budget also proposes to include rules addressing multiple-intermediary arrangements within the proposed back-to-back shareholder loan rules. This measure will apply to payments of interest or royalties made after 2016 and to shareholder debts as of January 1, 2017. Personal Tax Measures Canada Child Benefit A new Canada Child Benefit will replace the Universal Child Care Benefit (UCCB), Canada Child Tax Benefit (CCTB) and National Child Benefit, for payments starting July 2016. The new monthly benefit is tax-free and declines as income rises. It may be eliminated when household income is as low as 157,188. Additional amounts will continue to be provided when the child is eligible for the disability tax credit. The program is extended to include all individuals who are Indians under the Indian Act and residents of Canada for tax purposes where all other eligibility requirements are met. The budget also proposes to allow a taxpayer to request a retroactive payment of the Canada Child Benefit, CCTB or UCCB within a 10 year period effective for requests made after June 2016. Top Marginal Tax Rate Consequential Amendments The budget includes additional amendments to the ITA to reflect the new top marginal income tax rate for individuals as follows: provide a 33 charitable donation tax credit (on donations above 200) to trusts that are subject to the 33 tax rate on all of their taxable income apply the 33 tax rate on excess employee profit sharing plan contributions increase the tax rate on personal services business income earned by corporations to 33 amend the definition of relevant tax factor in the foreign affiliate rules to reduce the relevant tax factor to 1.9 amend the capital gains refund mechanism formulas for mutual fund trusts to reflect the top rate of 33 increase the Part XII.2 tax rate on distributed income of certain trusts from 36 to 40 amend the recovery tax rule for qualified disability trusts to refer to the 33 rate Teacher and Early Childhood Educator School Supply Tax Credit As of January 1, 2016, an eligible educator (individuals holding a valid teachers certificate in the province in which they are employed) can claim a 15 refundable tax credit on up to 1,000 in eligible supplies for use in a school or regulated child care facility. Northern Residents Deduction Beginning 2016, the maximum residency deduction has increased to up to 11 per day per household member, and, when no other member claims the deduction, to 22 per day. Mining Exploration Tax Credit for Flow-Through Shares This credit is extended by one year and will apply to flow-through share agreements entered into on or before March 31, 2017. Taxation of Switch Fund Shares Mutual fund and investment corporations can issue multiple classes of shares. Some corporations are structured so that each share class tracks a fund that comprises a specific pool of assets. The corporate rollover rules allow an investor in one class of shares to switch to another class that tracks a different fund without recognizing accrued gains on the original investment. The budget proposes a measure, effective for dispositions that occur after September 2016, which will treat an exchange of shares that track different funds to be a disposition at fair market value. The measure will not apply to switches when the shares received in exchange differ only in respect of management fees or expenses to be borne by investors and otherwise derive their value from the same portfolio or fund within the mutual fund corporation (e. g. the switch is between different series of shares within the same class). Sales of Linked Notes Linked notes are a type of investment whereby a taxpayer is entitled to a return on its original investment that is contingent on the performance of a reference asset such as a basket of stocks, a market index, a commodity, a currency, or units of a fund. Investors often take the position that the accrued return on a linked note is not taxable until maturity. Investors who treat the notes on capital account can, by selling before maturity, convert their accrued but unrealized return from fully taxed income to a capital gain taxed at 50. The budget proposes rules that will treat the accrued but unrealized increase in value on a linked note to be accrued interest for the purpose of the prescribed debt obligation rules. This accrued interest is included in income at the time of disposition. Any gain or loss on the debt obligation due to foreign exchange fluctuations is excluded in determining the amount of accrued interest. If a portion of the return on a linked note is based on a fixed rate of interest, the rules will also exclude any portion of the gain that is reasonably attributable to market interest rate fluctuations. Employee Stock Options Changes to the taxation of employee stock options have been anticipated since the election of the new government. At a press conference held after the release of the budget, the Finance Minister confirmed that the government will not modify the tax treatment of stock options. Family Income Splitting Beginning 2016, the family income splitting credit is eliminated. This credit refers to the measure that, during 2014 and 2015, allowed some families with children under 18 to reduce their tax bills by up to 2,000. Education and Textbook Tax Credits Starting 2017, the education and textbook tax credits are eliminated. Annually, these credits resulted in tax savings of up to 720 and 117, respectively. Childrens Fitness and Arts Tax Credits Effective 2016, the maximum eligible amounts will be reduced to 500 for the childrens fitness tax credit and 250 for the childrens arts tax credit. Both credits will be eliminated for the 2017 and subsequent taxation years. The current credits resulted in annual tax savings of up to 150 and 75, respectively. Labour-Sponsored Venture Capital Corporations (LSVCC) Tax Credit The federal tax credit of 15 is restored for share purchases of provincially registered LSVCCs for the 2016 and subsequent years. Certain newly registered LSVCCs under provincial legislation may be eligible for prescription under the ITA. The federal LSVCC tax credit for federally registered LSVCCs will remain at 5 for 2016 and will be eliminated for the 2017 and subsequent taxation years. Ontario Electricity Support Program Amounts received under the Ontario Electricity Support Program (introduced as of January 1, 2016) will be exempt from income. Withholding for Non-Resident Employers The budget affirms the governments intention to proceed with proposed legislative changes to Canadian payroll withholding compliance requirements for non-resident employers with non-resident employees working temporarily in Canada. Although not included in the budget, there are indications there will be some modifications to the original draft legislation, taking into account consultations and deliberations since the original announcement. Many of these discussions involved further simplification of the compliance process. The original legislation released by the Department of Finance on July 31, 2015, was not enacted into law due to the change in the Canadian federal government in October 2015. Foreign employers that have: already applied for non-resident employer certification with the CRA have assurance that it is still the governments intention to go forward with proposed legislation with potentially favourable modification not applied for certification and may have been delaying the decision to certify until Canada enacted the proposed changes may now want to reconsider certification as an approach to Canadian payroll compliance See our Tax Insights quotBudget 2016: Canada affirms reintroducing legislative changes to payroll withholding compliance for non-resident employers, quot which will be available shortly at pwccataxinsights . Sales and Excise Tax Measures Health Measures For supplies made after March 22, 2016, the budget adds insulin pens, insulin pen needles and intermittent urinary catheters to the list of zero-rated medical devices. In certain cases, supplies made before March 23, 2016, will also be zero-rated. Furthermore, for supplies made after March 22, 2016, the budget clarifies that GSTHST generally applies to supplies of purely cosmetic procedures provided by all suppliers, including registered charities. Exported Call Centre Services The supply of a service of rendering technical or customer support to individuals by means of telecommunications (e. g. by telephone, email or web chat) made after March 22, 2016, will generally be zero-rated for GSTHST purposes if: the service is supplied to a non-resident person that is not registered for GSTHST purposes, and it can reasonably be expected at the time the supply is made that the technical or customer support is to be rendered primarily to individuals who are outside Canada at the time the support is rendered to those individuals In certain cases, supplies made before March 23, 2016, will also be zero-rated. Reporting of Grandparented Housing Sales Under the transitional rules that applied when a province either joined the harmonized value-added tax system since 2010 or increased its HST rate, certain sales of newly constructed or substantially renovated homes were grandparented for HST purposes. The budget simplifies builder reporting with respect to grandparented housing sales by: limiting the reporting requirement to those grandparented housing sales for which the consideration is equal to or greater than 450,000, and allowing builders to correct past misreporting and avoid potential penalties by electing to report all past grandparented housing sales for which the consideration was equal to or greater than 450,000 Generally, this measure will apply in respect of reporting periods of a person that end after March 22, 2016, and for any sales of grandparented housing for which the federal portion of HST became payable after June 30, 2010, if the builder elects and files corrective returns between May 1, 2016, and December 31, 2016. GSTHST on Donations to Charities The budget proposes that, for supplies made after March 22, 2016, when: a charity supplies property or services in exchange for a donation, and an income tax receipt may be issued for a portion of the donation, only the value of the property or services supplied will be subject to GSTHST. The proposal will apply to supplies that are not already exempt from GSTHST and will ensure that the portion of the donation that exceeds the value of the property or services supplied is not subject to the GSTHST. In addition, when a charity did not collect GSTHST on the full value of donations made in exchange for an inducement, for supplies made between December 21, 2002 (when the income tax split-receipting rules came into effect) and March 22, 2016, transitional relief will be provided. De Minimis Financial Institutions Financial institutions are subject to GSTHST rules that exempt various activities from GSTHST and restrict the ability of such institutions to claim input tax credits (ITCs) on inputs. A person can be deemed to be a de minimus financial institution for a year if it earns more than 1 million in interest income in the preceding year. The budget proposes a rule to exclude interest on demand and term deposits and GICs issued for 364 days or less in determining whether a person exceeds the 1 million dollar threshold. The rule is effective for years that begin after March 21, 2016, and the fiscal year of a person that includes March 22, 2016, for the purpose of determining if the person is required to file the Financial Institution GSTHST Annual Information Return. Application of GSTHST to Cross-Border Reinsurance GSTHST imported supply rules for financial institutions require a financial institution, including an insurer, with a presence outside Canada to self-assess GSTHST on certain expenses incurred outside Canada that relate to its Canadian activities. Uncertainty has existed in relation to the application of these rules to reinsurance premiums. The budget proposes to clarify that two specific components of the premium for imported reinsurance services, ceding commissions and the margin for risk transfer, do not form part of the tax base that is subject to self-assessment, and to set out specific conditions under which the special rules for insurers do not impose GSTHST on reinsurance premiums charged by a reinsurer to a primary insurer. This measure will apply as of the introduction of the special GSTHST imported supply rules for financial institutions (i. e. in respect of any specified year of a financial institution that ends after November 16, 2005), but solely for the purpose of taking into account the effect of this measure. In addition, this measure will allow an insurer to request a reassessment by the Minister of National Revenue of the amount of tax owing by the financial institution under the special GSTHST imported supply rules for prior years, as well as any related penalties or interest. A financial institution will have until the day that is one year after the day that these amendments receive royal assent to request such a reassessment. Closely Related Test Under the GSTHST, special relieving rules allow the members of a group of closely related corporations or partnerships to neither charge nor collect GSTHST on certain intercompany supplies. To ensure that the closely related test applies only when nearly complete voting control exists, the budget provides an additional requirement a corporation or partnership must hold and control 90 or more of the votes in respect of every corporate matter of the subsidiary corporation (with limited exceptions). This measure will generally apply as of March 22, 2017. It will apply as of March 23, 2016, for the purposes of determining whether the conditions of the closely related test are met in respect of elections under section 150 and section 156 of the Excise Tax Act that are filed after March 22, 2016, and that are to be effective as of March 23, 2016. Restricting the Relief of Excise Tax on Diesel and Aviation Fuel To ensure that the excise tax relief provided for heating oil applies only to heating in respect of buildings, the budget proposes to define heating oil, for excise tax purposes, as fuel oil that is consumed exclusively for providing heat to a home, building or similar structure, and is not consumed for generating heat in an industrial process. The budget also proposes to remove the generation of electricity exemption for diesel fuel used in or by a vehicle, including a conveyance attached to the vehicle, of any mode of transportation. Therefore, no relief will apply to fuel used to produce electricity in any vehicle (e. g. trains, ships, airplanes), regardless of the purpose for which the electricity is used. Both of these measures will apply to fuel delivered or imported after June 2016, and to fuel delivered or imported before July 2016 that is used, or intended to be used, after June 2016. Enhancing Certain Security and Collection Provisions in the Excise Act, 2001 To ensure that security requirements better reflects current tobacco duty rates, the budget proposes to increase the maximum amount of security required for a person to be issued a licence or any duty-paid stamps from 2 million to 5 million. This change will be effective on the later of the day following the day of royal assent to the legislation enacting the new collection proposal (see below) or three months following March 22, 2016. To enhance certain enforcement measures under the Excise Act, 2001 . the budget proposes to give the Minister of National Revenue the authority to require security for payment of assessed amounts and penalties in excess of 10 million that are not otherwise collected under the Excise Act, 2001. If the requested security is not furnished to the Minister, the budget also proposes that the Minister be provided the authority to collect an amount equivalent to the amount of security that the Minister had required. This measure will apply to amounts assessed and penalties after the day of royal assent to the enacting legislation. Other Tax Measures Improving Tax Compliance The budget provides support to the CRA to: enhance its efforts to crack down on tax evasion and combat tax avoidance by hiring additional auditors and specialists, developing robust business intelligence, increasing verification activities and improving the quality of investigative work that targets criminal tax evaders improve its ability to collect outstanding tax debts ramp up its outreach efforts to ensure that taxpayers understand and meet their tax obligations Aboriginal Tax Policy The government reiterates its support for direct taxation arrangements with Aboriginal governments. Previously Announced Measures The budget confirms that the government will proceed with the following previously announced measures, as modified to take into account consultations and deliberations since their announcement or release: the common reporting standard established by the Organisation for Economic Co-operation and Development for the automatic exchange of financial account information between tax authorities legislative proposals on the income tax rules for certain trusts and their beneficiaries (draft legislative proposals were released for comment on January 15, 2016) synthetic equity arrangements under the dividend rental arrangement rules the conversion of capital gains into tax-deductible inter-corporate dividends (section 55) the offshore reinsurance of Canadian risks alternative arguments in support of an assessment an exception to the withholding tax requirements for payments by qualifying non-resident employers to qualifying non-resident employees the repeated failu re to report income penalty the acquisition or holding of limited partnership interests by registered charities the qualification of certain costs associated with undertaking environmental studies and community consultations as Canadian exploration expenses the sharing of taxpayer information within the CRA to facilitate the collection of certain non-tax debts the sharing of taxpayer information with the Office of the Chief Actuary the tax deferral in respect of the commercialization of the Canadian Wheat Board the GSTHST joint venture election the relief of the GSTHST for feminine hygiene products Further, the government will move forward as required with technical amendments to improve the certainty of the tax system. However, it will not proceed with the measure announced in the 2015 budget that would provide an exemption from capital gains tax for certain dispositions of private corporation shares or real estate when cash proceeds from the disposition are donated to a registered charity or other qualified donner within 30 days. Taxation of Stock Options for Employees in Canada Did you receive stock options from your Canadian employer If yes, then it8217s highly recommended that you go over the points in this article. In this article, I explain how the 8220Taxation of Stock Options for Employees in Canada8221 directly affects you. What is a stock option An employee stock option is an arrangement where the employer gives an employee the right to buy shares in the company in which they work usually at a discounted price specified by the employer. There are different types of stock options that can be issued to employees more information can be found on the Canada Revenue Agencys website . For employers who are looking to sell the shares of their company, please have a look at our article, Planning on Selling a Business CCPCs (Canadian Controlled Private Corporations) Employee Stock Options A CCPC is a company thats incorporated in Canada, whose shares are owned by Canadian residents. By definition, a CCPC is a private company and is therefore not listed on a public stock exchange like the New York Stock Exchange or the Toronto Stock Exchange. When your employer grants or gives a stock option to you, you do not have to include anything in your taxable income at that time. In other words, there is no tax consequence to you at the grant date. When you exercise a stock option, which means to purchase the shares through your employer, you must include a taxable benefit in your income. The taxable benefit is equal to the difference between the exercise price (i. e. the price you paid to buy the shares) and the market value of the shares at the time of purchase. There is a special tax deferral for employees of CCPCs. The taxable benefit can be postponed to the date the shares are sold. This makes it easier for employees to pay tax because they will have cash available from the sale of the shares. Lets look at an example. Assume that the exercise price is 3 share, and the market value is 10 share. When you exercise your right to buy the shares, a taxable benefit is realized for 7 share (10 minus 3). Remember, for employees of CCPCs the taxable benefit is postponed until the shares are sold. If you meet one of these two conditions, you can claim a tax deduction equal to of the taxable benefit, or 3.50 in this example (50 x 7). You have held the shares for at least two years after you have purchased them The exercise price is at least equal to the fair market value of the shares when they were granted to you Tax Implications for Employee Stock Options CCPCPublic Companies Employee Stock Options Now, lets move on to the taxation of stock options for public companies. On the date that you are granted or receive stock options in an employer that is a publicly listed company, you do not have a personal tax consequence. However, on the date that you purchase the shares, you will get a taxable benefit equal to the difference between the exercise price of the shares and the market value of the shares on that date. You cannot postpone the timing of this taxable benefit. Lets assume you work for Coca-Cola Canada and the fair market value of the shares today is 30 share. According to the option agreement, you can exercise or buy the shares for 10 share. Therefore, the taxable benefit that will be included in your income at the time of exercise is 20 share. After buying the shares, you have two choices: (A) You can immediately sell the shares or (B) You can hold onto them if you believe they will increase in value in the future. If you choose to hold onto the shares and sell them in the future for a profit, the profit made from the sale will be classified as a capital gain and subject to tax. Whether you sell the shares or hold onto them, taxes will be deducted from your paycheck to account for the taxable benefit you realized on the purchase of the shares. However, dont hold onto the shares for too long after purchasing them. This is because if the price of the stock drops youre still liable for the taxable benefit realized on the purchase date. You can claim a tax deduction for of the taxable benefit realized on the exercise date. To do so, all of these 3 conditions must be met: You receive normal common shares upon exercise The exercise price is at least equal to the fair market value of the shares at the time the options were granted You deal at arms length or on a third party basis with your employer Disclaimer The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page. ABOUT THE AUTHOR ALLAN MADAN CA. CPA. CGA Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area. Post navigation Capital loss is only applied to cases where you have actually sold the stock. Luckily, for you there is a provision under section 50(1) of the income tax act that does allow for some tax relief. When this is applied, the shares will be deemed to have been disposed of for proceeds of nil at the end of the year, and to have been recacquired for adjusted cost base (ACB) of nil immediately after the end of the year. As a result, you will be able to realize the capital loss on the stock. The superficial loss rule does not apply in situation. Allan Madan and Team What if my company is being taken over by several investors and is going from a public to a private company, when they own 90 of the shares, I am force to sell mine at below market value, do I get any tax relief in terms of capital losses IF you are force to sell your shares then it is illegal for them to pay at below market value for the remaining shares, you should be able to get at least market value you for them. IF not, you can deduct your capital loss against your capital gains for tax relief. Allan Madan and Team I did some contracting work for a small startup tech company. Since they had no money they paid me in shares, if and when they take the company public, would I have to pay taxes then You would only have to pay capital gains tax when and if you decide to exercisesell your shares. If you continue to hold onto them, you will not be subjected to any taxes. Allan Madan and Team Is it possible to hold my stocks within a TFSA account how would the accrued interest on these stocks be taxed Yes common shares generally qualify for TFSA investments, however those shares must be listed on a designated stock exchange. If they are not listed, then they will be categorized as a non-qualified investment inside your TFSA and you will be hit with some severe penalties. The taxation of the accrued interest would be the same for any type of investment contributions made to your TFSA. Allan Madan and Team What would be classified as a designated stock exchange what about penny stocks Hi Mahmoud, the Canadian Department of Finance has a list of 41 designated stock exchange on it website here fin. gc. caactfim-imfdse-bvd-eng. asp . Penny stocks traded on pink sheets are not on a designated stock exchange but any penny stocks (people disagree on its definition) that are listed on any of the designated stock exchange are eligible for TFSA investments. Allan Madan and Team What if a stock is listed on multiple exchanges some of which are not listed, how would the department of Finance categorize this As long as the stock is listed on at least one approved stock exchange that is recognized by the department of Finance, it will qualify for TFSA investment. Allan Madan and Team Hi Allan. I currently work for a CCPC, and they have offered me 5000 in stock as compensation. As I am new to world of stocks, I am wondering what to do with these. What happens when I exercise my stock options Are there any tax implications Hello, and thanks for your question. Stock options are one of the most popular form of non-monetary compensation that employers offer. They are a taxable benefit, and should be included on your total employment income on box 14 of your T4 slip. Heres how they work. An employee is given the option to buy shares of a company at a future price. At this stage, there is nothing to report on income. When you buy the stocks at that agree-upon price (called exercising your option), the taxable benefit comes into play. This benefit is calculated as the difference between the fair market value of the shares on the date you purchased the shared and the price you paid for them. As your employer is a CCPC, you can defer all your taxable benefit until you sell your shares. Markus Greenbriar says: I worked for a company back in 2003 that had an IPO. Employees were awarded stock options, and I was given 2,000 shares. I still have the letter from the man who was then president and CEO. The length of the contract was 25 years. However, I ended up leaving the company a few months later, so it appears as if I am only 25 vested. The company has now been split into two separate companies. Do any of my stock options have value today Can I cash out my vested portion In your case, you would have 25 of the original contract for 2000 shares. The main question you need to answer here is which company took over the stock. If the company split into two, who took over the shares Also, did the company that took over shares covert the option contracts Sometimes the employee stock option plan (ESOP) will not have the options converted if the company is broken up. If the company did not give you options but just 2,000 shares, you would need to know what the shares converted into. Most companies only give option contracts to executives, because they are not actually holding onto the stock. Most option plans do not have a vesting, but the ESOP will. I would call the company that holds the stock, and find out what your options are. If the company split in 2003, it will probably take a long time to figure out the information. Companies are only required to keep records in the front office for 3 to 5 years, depending on the type of record. Therefore, the sooner you do this the better. If you received a T4 from the employer who also issued the stock options in your name, then the respective gain or loss would be reported as part of your T4 slip (as well as the stock option deduction in box 39 and 41). In addition, you will be able to claim 50 of the amount from line 4 of Form T1212, Statement of Deferred Security Options Benefits. Regards, Allan Madan and Team I received employee stock option when my company was private and now it went IPO. So its publicly traded, I still haven8217t 8220exercised8221 my stock options and it is set to expire soon. I am thinking of doing 8220Exercise and hold8221, when I do that I will have to pay the company the excessive price but will I also have to pay tax right away (even if I am not selling, just holding). Also how can I deffer the taxes so I can split the taxable profit to multiple years so I pay less taxes Any info of the 8220Exercise8221 and hold8221 option would be good. I received employee stock option when my company was private and now it went IPO. So its publicly traded, I still havent exercised my stock options and it is set to expire soon. I am thinking of doing Exercise and hold, when I do that I will have to pay the company the excessive price but will I also have to pay tax right away (even if I am not selling, just holding). Also how can I differ the taxes so I can split the taxable profit to multiple years so I pay less taxes Any info of the Exercise and hold option would be good. Terrence Salts says: What are the tax implications of trading stocks in a non-TFSA account with a brokerage, when it comes to end of year taxes on profits Is there a particular rate for capital gains Also, do I keep track of my gains and losses myself 50 of your gains are counted as taxable income. You can deduct past capital losses from current capital gains. After factoring in capital gains, if your personal income is below the exemption level you wont pay any taxes on it. You also dont have to pay taxes if you havent sold the stock this year. Earnings from dividends are taxed differently, and have different rates depending on whether they are considered eligible or inedible. Finally, keep track of all your gains and losses. Your institution may provide you with a summary, but will not give you a formal t-slip. Regards, Allan Madan and Team Jeremiah Rakham says: I received a company stock option some time ago. It has a strike price of 3.10, and a vest of 30,000 after each of three years. The most recent yearly dividend was 0.69, and six months ago the company offered to buy it back. Though they offered 2.80, nobody sold their shares. What, if anything should I do with these What are the tax rules surrounding my situation Tax rules for stock options in Canada differ, depending on whether the company is a CCPC. If it is, there is no immediate taxable gain. The gain is taxed when shares are sold, not exercised. This significantly reduces the up-front difficulty of purchasing stock options. Also, if shares are held for at least two years after the exercise, half of the initial gains are tax-free. If it is not a CCPC, the taxable gain may be due in the year of exercise. Many companies in this situation offer near-immediate partial buyback to help offset these costs. The difference between the market value at the time of exercise and the value at the time of sale is taxed as income for non CCPCs. My advice is to exercise and sell if the stock price is higher, and take your cash profit. Then, use that profit to buy shares and collect dividends. You will get taxed on the profit from selling your options, and later on the dividends. Regards, Allan Madan and Team Govind Swarna says: I work in Canada for a company that trades in the US. One of the benefits I get from my job is that I get restricted stock units (RSUs) once a year. These are connected to an ETrade account that the company arranged for me. I have filled out the W-8BEN tax form. I believe this is the correct form. I just found out that there was an automatic 8216sell to cover8217 action that sold enough stock to account for 40 of the value that had vested. Does this amount satisfy Revenue Canada when it comes to tax time Or do I need to put some of the remainder aside as well I asked an accountant, and he said that since it is a capital gain that the CRA would tax me on 50 of the value8230is this correct Also, the stock vested at 25.61 (which is the value at which the sell-to-cover happened), but by the time I could sell, the stock was at 25.44. Does that have any bearing on my situation The fair market value of the RSU at vest time is treated as regular income paid to you by your employer and will be taxed at your marginal rate. 40 should be enough withholding to satisfy your personal income tax, depending on what your total income for the year is. Since it vested at 25.61 but you sold it at 25.44, you8217ll be able to claim a capital loss (or carry it forward to a year where you have gains you can offset with it). Regards, Allan Madan and Team I work for a start-up company, and part of my compensation is stock options. Assuming that we get a chance to exit (big assumption, of course), I stand to make a large sum of money when I exercise them. What happens at this point with regards to tax As I understand it, all growth from the exercise price will be taxed as capital gains. Is this correct If so, I would end up losing a large percentage in taxes. Is it possible to exercise the options sheltered inside a TFSA or RRSP to avoid capital gains Is there anything I8217d need to do beforehand (e. g. 8220transfer8221 the options un-exercised into a TFSA) to prepare for that Your options are taxed at capital gains rates (i. e. 50) since you get a 50 deduction on the income inclusion assuming you meet certain conditions. Regarding holding them in a TFSA or RRSP, make sure that you ensure they will not be considered a non-qualified andor prohibited investment. In general, you need to ensure that you and non-arms length parties (such as relatives) will not own more than 10 of the company. However, you may not be able to get them into a TFSA without paying some tax on them. This is the point of a TFSA the contributions are after-tax. You could possibly exercise the option, pay the (income) tax, then transfer the shares to a TFSA. However, this is assuming the stock price goes up after you exercise. Regards, Allan Madan and Team Aaron Samuel says: Hello, in 2012, I bought 1,000 shares at my company at 10 each. In 2013, the stocks shot up to 40 a share. Some of my co-workers and I decided to sell the shares, but then the stocks declined back down to 10 a share. How should we handle this situation Hi, In this case you should report a taxable employment benefit of 30,000 on your T1 return. This represents the profit earned on the shares up to the date of exercise. In addition, you should report a capital loss of 30,000 because the shares dropped in value when you sold them. The bad news is, the capital loss of 30,000 cannot be offset with the taxable employment benefit of 30,000. If you want, you can contact your local CRA Tax Services office, explain the situation, and they will determine whether special payment arrangements can be made. Allan Madan and Team Hi, My wife will need to exercise some options from her former employer this week. It8217s a publicly traded company. I understand she will have pay taxes on the difference of price between the exercise price and the current value. My question is who is required to send the tax amount to the CRA: The employer or her. If it8217s the employer, does that mean they can withhold some of the shares as payment to the CRA Thanks Generally, the difference between the fair market value of the shares at the time the option is exercised and the option price will give rise to a taxable benefit. This taxable benefit is included in the employment income when the stock option is exercised (i. e. it is added onto the T4 just like a salary or a bonus). Since this amount is like a salary, the employer has to make payroll remittances on it (CPP, EI and income tax). Carla Harmon says: Hi, I was just wondering if there are any benefits of transferring the stocks from my employee stock savings account to a TFSA. Hi Kasey, if you work for a Canadian-controlled private corporation, you will be able to defer the tax on the employment benefit until the shares are sold. The CRA realizes that most people cannot find a way to pay tax on 50,000 of noncash compensation, which is why they allow you to defer the tax. However, if you do not work for a Canadian-controlled private corporation or a publicly traded company, no deferral will be available. Hello Allan, I made the election to defer income taxes on my shares in a public company. The stock value has since declined and I dont have enough money to pay the income taxes that I have deferred. Is there any way to postpone the payments until I get enough money to pay them off Hi Sarah, yes there is temporary relief that the CRA provides for employees who have made an election to defer income tax on declining stock options. The relief is intended to ensure the income taxes payable on the benefit arising on the exercise of the stock option does not exceed the proceeds of disposition received when the optioned securities are sold while taking account of the tax benefit resulting from the deductible capital loss on those securities. To take advantage of this relief, the election must be filed no later than your filing deadline for the taxation year during which the shares are sold, which is almost always April 30th. Hello Allan, I was thinking of giving shares to my employees instead of stock options. I know some of the advantages to this method, but not a lot about the disadvantages. Can you tell me a few disadvantages of giving shares to employees Hi Dan, here is a list of potential disadvantages for issuing shares to your employees. Deferred tax liability if shares are bought below fair market value. May need to defend the fair market value. You may also need an independent valuation, although that is very rare. You need to make sure that shareholder agreement provisions are in place. Issuing shares at very low prices on a cap table may look bad to new investors. More Shareholders to manage. Here are some advantages of giving out shares. You can get up to 800,000 in life-time tax-free capital gains. 50 deduction on gains if shares held for more than two years or if shares were issued at FMV. Losses in a CCPC can be used as allowable business losses if the business fails. Can participate in Ownership of company. Less dilution than if stock options are issued. I work for a public company and received 1000 shares of stock options. Let8217s say the exercise price was 10share, and the market value of the share was 13share (at the time the shares were exercised). I paid necessary tax at the time of exercise, but I did not immediately sell my shares. If the shares go up in value to 15share and I sell all my shares at this time, do I have to pay any taxes further taxes In your example, if you decide to sell your shares at 15, you will be taxed on the capital gain as follows: Adjusted Cost Base: 13 (FMV of when you exercised your shares) Proceeds of Disposition: 15 (FMV of when you sold your shares) Capital Gain: 2 Inclusion Rate: 12 Taxable Capital Gain: 1 share you sell. You record a gain of 2 for each share you sold and will have to pay 1 in taxable capital gains for each share you sold. I have a question concerning taxation of stock options. I work for a public company and was granted 1000 shares of stock options at the exercise price of 10share (according to the agreement). The market value of the shares was 13share (at the time the option was exercised). I paid the necessary taxes at the time of exercise and the employment benefit was included in my income on my T4 slip. If I hold on to the shares and the shares go up in value, and then I sell the shares at 15share, do I need to pay taxes for the additional gain of 2share Dear Sumeer, As an employee who exercises options and acquires shares, you are entitled to an offsetting deduction that equates to one half of the employment benefit amount. This is given to you as long as these conditions are met: 8211 the employer corporation is the issuer of shares 8211 the shares are not 8220preferred shares8221 but instead 8220prescribed shares8221 8211 the option exercise price must not be less than the fair market value of the shares at the time the option is granted 8211 the employee deals closely with the employer corporation I hope this helped, Thanks Allan Hello Allan, I am ready to declare my security option benefit and I work for a private Canadian corporation how do I go about this Thanks, Ranjeet Hello Ranjeet, Declaring your security options benefits depends on the type of company issuing the benefits. If the company is a Canadian controlled private corporation, you have to report the benefits the year you plan on selling your securities. Thanks, Allan Madan I exercised options using a net exercise (they used part of my available options to purchase shares and provided me with a certificate for those shares) last year but on review the company did not report the taxable benefit on my T4. The stock is for a publicly listed company on the TSX. How should this be cleared up with CRA Isn8217t it the companies responsibility to report this as income on my T4 It8217s the company8217s responsibility to report the taxable benefit realized upon exercising employee stock options. You should speak with your employer and ask them if they will be issuing amended T4 slips to their employees. What is your take on the Liberal government8217s pre-election promise to change how stop options are taxed I have unexercised employee options granted to me before the company I work for went public (IPO). I am concerned that the changes can have a significantly negative effect on the tax on the gains of those options ifwhen exercised next year (stock price is currently too low to exercise now, or I would). As such: 1) Do you think the federal government will go ahead with these changes I have read articles that make it sound like it may not be worthwhile to go ahead as companies would logically have to be given the ability to deduct options as an expense, which is now not the case. 2) Do you think there will be any grandfathering that may benefit situations such as mine 3) Do you think the changes will apply to pre-IPO companies as well as public companies 4) If the federal government does go ahead with changes, do you think the changes will be exactly as promised, or might there be some lessening of their impact (e. g. higher annual exclusion) These are excellent questions. While the liberal government has expressed its intention to make employer stock option benefits 100 taxable, they have said that this high inclusion rate will only apply on gains in excess of 100,000. Therefore, most Canadians will not be affected. I suspect that the liberal government will go head with these plans, but I8217m not completely certain. The finance minister announced that options granted prior to the date on which the new stock option rules come into effect will be grandfathered. He did not specify whether the rules will be different for pre-IPO companies or public companies. i work for a company that allows me to purchase stock options. they will match up to 30. i am about to be laid off. better to cash out now not sure if ei benefits will be reduced if i was to cash out while claiming ei. Thanks for your question. If your total income for the year including taxable stock option benefits and EI payments does not exceed 61,000, then your EI payments will not be clawed-back. I suggest that you first calculate the total taxable benefit from cashing our your stock options before you decide whether or not it makes sense to cash out. Hello Allan, can either stock option proceeds (or the options themselves) or ESPP stocks or proceeds be transferred or gifted to as spouse for taxation purposes. The stock are in an American company which has been purchased and these stocks will be paid out all at the same time. Thank you, Jane Hi Jane, They can be gifted to a spouse at cost, so that a capital gain will not arise on the transfer. BUT, any income or gains earned by the recipient spouse on the transferred stocks shares must be attributed back to the transferor spouse. So you can8217t save taxes by way of a gift to a spouse.