Ferlaino – Federal Court of Appeal confirms that the exercise price of employee stock options should be translated at the exercise-date spot rate

The former Director of Taxes at a large Canadian corporation argued unsuccessfully that the computation of his s. 7(1)(a) benefits on exercising options on the shares of the listed U.S. parent should depart from the norm by translating his exercise price using the much higher exchange rate at the time of option grant, rather than the rate (of around par) at the time of exercise. Scott JA considered this approach to be contrary to s. 261(2)(b).

Neal Armstrong. Summary of Ferlaino v. Canada, 2017 FCA 105 under s. 7(1)(a).