RE:RE:Re BlackoutSportyj - I think it is on your face. I love it when people talk like they know something but they dont and then get called out on it.
Income-Tax Implications of Exercising an Employee Stock Option: Employee Benefit under Subsection 7(1) of the Income Tax Act
No tax consequences arise when the employee receives the option; they arise when the employee exercises the option—i.e., when the employee acquires the shares under the employee stock option.
The employee must account for the benefit garnered from exercising the option when computing his or her income for the year. The benefit inclusion equals the fair market value of the shares at the time the employee exercised the ESO minus the option price and any amount that the employee paid to purchase the option. For example, the option price is $10 for 15 shares, the employee paid $5 to purchase the employee stock option, and the employee exercised the option when the 15 shares were worth $20. The employee’s benefit inclusion is $20 – $10 – $5 = $5.
The tax year in which the employee must include the benefit depends on whether the shares under the ESO are those of a Canadian-controlled private corporation (CCPC). If the ESO shares are those of a Canadian-controlled private corporation, the employee need not account for the benefit until he or she sells the shares. But if the employee-stock-option shares are those of a non-CCPC—i.e., a public corporation—the employee must account for the benefit in the year that he or she exercised the employee stock option and acquired the shares.