Double income-inclusion resulted where stock options were issued directly to a corporate consultant’s shareholder

Where a corporate consultant ("Corporation") was entitled under "Publico’s" stock option plan to receive options, but Publico issued the options directly to Corporation’s individual shareholder, CRA found that the stock option benefit on exercise was includible in Corporation’s income under s. 56(4) (or, in the alternative, s. 56(2)) and also in the individual’s income as a shareholder benefit – unless she received the benefit qua employee in which case it would be included in her income under s. 6(1)(a), with a potential deduction to Corporation.

Neal Armstrong.  Summaries of 11 March 2014 Memo 2013-0513221I7 F under s. 56(4), s. 56(2) and s. 15(1).