SARs are taxed when they vest

It is not clear that stock appreciation rights become taxable under the salary deferral arrangement rules when such SARs vest, given that this would turn on whether the executive is postponing the SARs' exercise in order to avoid immediate tax consequences. However, CRA likely would view the vested SAR as having been constructively received, so that “it seems likely that the SARs would be taxed at the moment they become fully vested” under general principles if not under the SDA rules.

Neal Armstrong. Summary of Kevin Bianchini and Reuben Abitbol, "Taxation of Stock Appreciation Rights", Taxation of Executive Compensation and Retirement (Federated Press),Vol. 24 No. 8, 2015, p.1655 under s. 248(1) - salary deferral arrangement.