Employee security option cash-out rights
If you acquire securities under a security option agreement and meet certain conditions, you may be entitled to a deduction equal to one-half of the security option benefit (security option deduction). In this case, your employer cannot claim a deduction for the issuance of the share.
Employee security option agreements can also be structured in such a way that you can dispose of your security option rights to your employer for a cash payment or other in-kind benefit.
For such transactions occurring after 4 p.m. EST on March 4, 2010, the security option deduction can only be claimed in one of the following situations:
- you exercise your options by acquiring shares of your employer
- your employer has elected (as indicated by completing box 86, Security option election, of your T4 slip) for all security options issued or to be issued after 4 p.m. EST on March 4, 2010, under the agreement and has filed such election with the Minister of National Revenue, that neither the employer nor any person not dealing at arm's length with the employer will claim a deduction for the cash payment in respect of your disposition of rights under the agreement
Return to Employee security options for other information.
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