Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Can we rule on the acquisition of shares by an employee under a verbal stock option agreement entered into in XXXXXXXXXX ?
Position: No.
Reasons: The proposed acquisition of shares under the existing verbal agreement is a completed transaction since the agreement was entered into in XXXXXXXXXX .
XXXXXXXXXX 2000-006020
M. P. Sarazin
Attention: XXXXXXXXXX
December 22, 2000
Dear Sirs:
Re: Advance Income Tax Ruling
XXXXXXXXXX (the "Company") (Account XXXXXXXXXX)
This is in reply to your letter of November 30, 2000, requesting an advance income tax ruling on behalf of the above-noted taxpayer.
The facts indicate that in XXXXXXXXXX the Company agreed to sell additional shares to XXXXXXXXXX (the "Employee") if certain corporate objectives were achieved in the subsequent period. There was no written agreement between the Company and the Employee. The Company has achieved its objectives and the Employee will acquire shares under this verbal agreement. You requested several rulings relating to the Employee's acquisition of shares under the verbal agreement.
As noted in paragraph 7 of Information Circular 70-6R3, advance income tax rulings will only be provided with respect to proposed transactions. This Directorate will not issue an advance income tax ruling on transactions that are already completed or on series of transactions that are significantly advanced. Since your ruling request relates to a verbal agreement between the Company and the Employee that has existed since XXXXXXXXXX, we are not able to provide the requested advance income tax ruling.
We note that subsection 7(1) of the Income Tax Act applies where a particular qualifying person has agreed to sell or issue securities of the particular qualifying person. The provision does not refer to a written agreement and, as such, the provision may apply where there is a verbal agreement to sell or issue securities between an employer and an employee.
A billing for the time spent considering your request for an advance income tax ruling will be sent under separate cover.
Yours truly,
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
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