Principal Issues: Does paragraph 7(3)(b) prohibit an employer from claiming a deduction for a portion of its expenses relating to the issuance of shares under a RSU plan that is subject to section 7, where the employer pays an amount to the Receiver General on behalf of an employee in lieu of issuing shares to the employee under the RSU plan?
Position: Yes.
Reasons: The employee is considered to have disposed of a portion of their rights under the RSU plan and is thus deemed to have received a benefit under paragraph 7(1)(b) equal to the amount of income tax remitted to the Receiver General by the employer. Since the benefit arose from the issuance of the shares, paragraph 7(3)(b) operates to preclude a deduction to the employer in respect of the benefit.
