Acco340Lecture 2-3 - Employment Income

If options are for ccpc shares ita 1101d1 50

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                                                                  If options are for CCPC shares:                                                                     -ITA 110(1)(d.1) 50% deduction on employee benefit on exercising options                                                                     will only be available if the shares are held 2 years after being acquired                                                                    -deferral in reporting employee benefit on exercising options is not relevant                                                                    as no benefit is reported on exercising CCPC options                         2. Exercising options -for CCPC shares – no reporting of employee benefit
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-for Public shares  - reporting of employee benefit (FMV less Option price), but some deferral is possible  (for options  exercised before March 4,   2010) if option price at the time of granting was equal to or greater than FMV 3.  Employee Benefit Deferral         ( for options exercised before March 4, 2010)                                         For general information- will not be tested) -Deferral under ITA 7(8) is in respect to a “qualifying acquisition” of shares pursuant to the exercising of options -Amount elected for deferral is based on the benefit earned on a determined number of  vested shares  that were acquired -the  number of vested shares eligible for deferral is determined by $100,000 divided by the  FMV  , not the option price , of  the shares at the time option was granted   Example: -Option granted and automatically vested to a acquire 17,000 shares of PublicCO for $11- FMV was $10                - all the options were exercised when the FMV was $31  -employee benefit $20 per option ($31 FMV -$11 option price) = 17,000 X $20 = $340, 000 =  the specified value -maximum deferral   $100,000 / $10  (FMV not the option price) = on 10,000 shares only     -maximum deferral election       10,000 shares X ($31-$11)   =$200,000  -non-deferred income inclusion 7,000 shares x ($31-$11)= $140,000   (Part of net employment income of Division B Income) -ITA 110 (1)(d) 50% deduction   $140,000 reported income X  50% =( $70,000) -net taxable employee benefit   $140,000-$70,000 =  $70,000   (after Division C deduction )        Prescribed max amount           X specified value   = Deferral                
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