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Loren Kroeker - MNP LLP- Loren Kroeker

Tax Alert: Changes to Stock Option Deductions - Many corporate employers offer employees the right, or option, to acquire the employer’s shares at a specified price, as part of a remuneration package. Essentially, employees who receive stock options are granted the right to purchase shares of the corporation at a fixed price on a future date. If the stock increases in value between the date the option is granted and the date the option is exercised, the employee receives an employment benefit when he or she exercises the option. The benefit is equal to the difference between the fair market value (FMV) of the shares at the time the option is exercised, and the actual cost to the employee of the shares. This employment benefit is added to the employee’s purchase price of the shares such that the employee’s adjusted cost base (ACB) would be equal to the FMV at the time of exercise. There is an offsetting deduction available to employees who exercise options that is equal to one-half of the employment benefit (assuming certain conditions are met). The result of this deduction is that the employment benefit is effectively taxed as if it were a capital gain. Furthermore, in the case of options on shares of a Canadian-controlled private corporation, taxation of the stock option employment benefit can be deferred until the shares are sold by the employee. Finance Minister Bill Morneau said he will release details in the near term on his plans for changes in the taxation of stock options. The Liberal Party has pledged to limit the amount…

Photo : Loren Kroeker February 01, 2016

Philip Aubry - Perley-Robertson Hill & McDougall LLP - Philip Aubry

Investor Crowdfunding Coming to Ontario - Sponsored Article The Ontario Securities Commission (“OSC”) announced last month (November 5, 2015) that it will join Saskatchewan, Manitoba, Quebec, New Brunswick and Nova Scotia in allowing businesses to participate in equity crowdfunding regulations.  Provided all necessary Ministerial approvals are obtained, investor crowdfunding will finally come into force in Ontario and other jurisdictions on January 25, 2016.   Although accredited investors have been allowed to participate in equity crowdfunding since 2013, the new regulations will allow all investors to participate, with restrictions on how much they can invest, as well as limits on what the company can raise in order to limit risk. Under the OSC’s new rules, businesses will be required to offer such equity stakes through registered crowdfunding platforms.  These crowdfunding platforms will be responsible for background checks and other due diligence on companies and investors. Other key conditions of the new OSC regulations include offering non-complex securities such as common shares and non-convertible preference shares as well as issuers will be required to complete a Risk Acknowledgement Form and an offering document.  In addition, businesses will have a limit of $1,500,000 in capital they can raise and investment limits for investors will be $2,500 per investment and in Ontario, $10,000 total in a calendar year per investor.  Accredited investors are limited to $25,000 per investment and in Ontario, $50,000 in total per calendar year. Although crowdfunding has many benefits including faster access to funding for start-ups and businesses, there are a few issues a business should consider prior to using the crowdfunding exemption. Some of the…

Photo : Philip Aubry January 07, 2016

Karin Pagé - Perley-Robertson Hill & McDougall LLP - Karin Page

Why You Need a Written Employment Agreement - Sponsored Article Perley-Robertson, Hill & McDougall LLP/s.r.l. has a long history of providing employment law advice to its diverse clientele. With our employer clients, we always recommend the preparation and implementation of written agreements for all of their team members whether they are employees, independent contractors, associates, or partners. Let us explain why. Certainty                                             The most important reason to have written agreements in place is to provide certainty regarding your expectations and to govern how you will interact during the relationship, but they are also critical to establishing your respective obligations on termination of the relationship. This certainty alone can provide considerable peace of mind and cost savings by avoiding disputes and unnecessary litigation. Minimize Liability Besides certainty, a written employment agreement can serve to minimize an employer’s obligations upon termination. Many employers are surprised to learn that without a written agreement to the contrary, an employee is entitled to “reasonable notice” on termination, and that such notice can be up to 24 months or more of the employee’s gross salary and benefits – an amount that far exceeds the notice required by Ontario’s Employment Standards Act. However, it is possible to craft an agreement that satisfies an employer’s obligations under the Employment Standards Act, but avoids the common law obligation to provide “reasonable notice” a concept that by its very nature is vague and uncertain. This is because what notice will be reasonable…

Photo : Karin Pagé November 12, 2015

Dale Barrett - Barrett Tax Law Firm - Dale Barrett

The Lifetime Capital Gains Exemption: Plan ahead - Sponsored Article People often ask me about the Lifetime Capital Gains Exemption (the “LCGE”), which for the 2015 tax year is $813,600, and many just assume that any capital gain can be covered under the exemption.   Actually, the LCGE allows one to dispose of Qualified Farm Property, Qualified Fishing Property, or shares of a Qualified Small Business Corporation and not pay any capital gains tax on the first $813,600.  And as the wording suggests, there are qualifications. In general only ½ of a capital gain is taxable, and with the LCGE, the 2nd half can be non-taxable too up to $406,800 (in 2015) – by virtue of a capital gains deduction. With many people either actively in the process of selling their business or planning for this eventuality, there is a great deal of confusion as to what kinds of sales would be subject to the LCGE, and thus many people don’t take the necessary steps to protect themselves, which can cost hundreds of thousands of dollars. The Qualified Small Business Corporation A gain from the sale of shares of a Canadian controlled private corporation can qualify for the LCGE if a number of conditions are satisfied; one of those being that at the time of sale, all or substantially all of the assets (90%+) of the business are used principally in an active business carried on primarily in Canada.    What this means in practice is that the in the course of an audit the LCGE could be at risk if the Canada…

Photo : Dale Barrett November 23, 2015

Gregory Sanders - Perley Robertson Hill Mcdougall LLP - Gregory Sanders

So You Want to be an American - Sponsored Article A Layman’s Guide to FATCA Asif Canadian reporting requirements are not enough, Americans living in Canadaalso have to comply with the U.S. tax and reporting system and Canadian banks are there to make sure Americans are complying.  This was made that much more complex after 2010 when the United States introduced the Foreign Account Tax Compliance Act or “FATCA” as it is known.  FATCA imposed extensive and unprecedented information reporting obligations both on American citizens with foreign assets and foreign financial institutions that have accounts beneficially owned by U.S. persons. Although the financial community outside the United States tended to deride the reporting obligations imposed by FATCA arguing that they were both unenforceable and/or that local jurisdictional law prevented compliance, the United States government plowed through these objections and began entering into agreements with various countries in order to provide the information required under FATCA. The American government was inspired to implement FATCA as a result of the discovery of the number of U.S. persons that were evading tax by using foreign accounts.  The intent of FATCA was to obtain information about foreign institutions that have U.S. account holders and to require U.S. owners of foreign accounts to report the existence of those accounts under the risk of severe penalties.  The purpose of FATCA was not to collect tax from these individuals but to ensure their compliance.  However, the U.S. government needed a ‘stick’ to force financial institutions to comply with the requirements to disclose U.S. account holders and that ‘stick’ was a…

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Photo : Gregory Sanders October 12, 2015