Mathieu – Tax Court of Canada finds that non-arm’s length stock option surrender proceeds were non-taxable

Until the introduction of s. 7(1)(b.1), stock option proceeds received from surrendering stock options to a corporate employer with which the employee did not deal at arm’s length were not taxable under s. 7.  Paris J has found that, given the "clear and unequivocal" language of s. 7(3)(a), they also were not taxable as a benefit under s. 6(1)(a).

The protestation in the Explanatory Notes that s. 7(1)(b.1) was enacted to "clarify" the existing law clearly was incorrect and (as usual) ignored.

Neal Armstrong. Summaries of Mathieu v. The Queen, 2014 TCC 207 under s. 7(3)(a), s. 251(2)(a), Statutory Interpretation – Specific v. general provisions, Interpretation Act, s. 45(2).