Advertisement
Canada

Liberal budget to raise taxes on stock options for execs of large companies

WATCH: Here are the goodies found in the budget

The federal government is changing the way stock options are taxed for big established companies, so executives who get large stock grants pay more in tax.

Under the current rules, stock-option benefits are taxed at half the normal rate of personal income, the same rate as capital gains.

WATCH: Bill Morneau presents budget in House of Commons

Federal Budget 2019: Bill Morneau presents budget in House of Commons
Federal Budget 2019: Bill Morneau presents budget in House of Commons

The plan announced in the federal budget today will apply a $200,000 annual cap on stock-option grants that are eligible for the lower-tax treatment, for employees of large, long-established firms.

READ MORE: No plan for balanced budgets even if Trudeau wins second majority

The government plans to exclude startups and rapidly growing businesses from the cap, so they can keep using stock options to attract and reward employees.

Story continues below advertisement

Further details of the plan are due in the summer.

The government noted the change will only apply to options granted in the future and will not apply to those granted before the announcement of legislation to implement the new plan.