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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Can employee stock option benefits be included as pensionable earnings for a registered pension plan?
Position: Yes
Reasons: "Compensation" in subsection 147.1(1) includes amounts in respect of office or employment that are required by section 5 or 6 to be included in income. Benefits calculated under s.7 are included in income pursuant to 6(1)(a) of the Act.
April 25, 2003
Annelisa Gillespie HEADQUARTERS
Registered Plans Directorate Renée Shields
16th Floor, Tower "B" (613) 948-5273
Place de Ville, 112 Kent Street
2003-000984
Employee Stock Option Benefits as Pensionable Earnings
This is further to our electronic mail of April 7, 2003 regarding a request by XXXXXXXXXX for an advance income tax ruling with respect to an amendment to an existing registered pension plan ("RPP") to allow employee stock option benefits to be included in pensionable earnings.
As discussed, it is more appropriate that XXXXXXXXXX's concerns be resolved by submitting amendments to the RPP in question for review by the Registered Plans Directorate ("RPD"). XXXXXXXXXX has agreed to this manner of proceeding, and has also consented to our forwarding a copy of his submission to your attention. We have also enclosed a copy of our response XXXXXXXXXX as well as our prior memorandum on the subject, which was addressed to the Compliance Division of RPD.
We understand that in reviewing the plan amendment to determine whether it is acceptable under the rules of registration you may require some information with respect to the taxation of employee stock options. While you may wish to refer to Interpretation Bulletin IT-113R4, "Benefits to Employees - Stock Options", we are certainly available to provide assistance in this regard.
Mickey Sarazin, C.A.
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
Enclosures
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© Her Majesty the Queen in Right of Canada, 2003
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