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:
Whether options are received by a director by virtue of employment?
Position TAKEN:
Question of facts. The options are received in respect of an employment where the options are granted to directors in consideration for the services to be performed as directors.
Reasons FOR POSITION TAKEN:
7-2719, 7-911478
Michael K. Taylor 88 DTC 1571 (T.C.C.)
5-942052
XXXXXXXXXX Robert Gagnon
Attention: XXXXXXXXXX
September 6, 1994
Dear Sirs:
Re: Stock Options
This is in reply to your letter of March 31, 1994 wherein you requested a technical interpretation addressed to Montreal District Office. Your request has been forwarded to the Rulings Directorate for reply. We apologize for the delay in replying.
Unless as otherwise stated all references to statute are to the Income Tax Act ("Act") S.C. 1970-71-72,c.63 as amended consolidated to June 10, 1993.
Pursuant to the definitions of "employee" and "office" in subsection 248(1) of the Act, a director of a corporation is deemed to be an employee for the purposes of section 7 of the Act, even though he receives no remuneration. Subsection 7(5) of the Act specifically provides that section 7 of the Act applies if the options are received in respect of the employment.
The question of whether an option is received in respect of an employment is a question of facts which can only be determined from a review of all the relevant circumstances. It is our view that options are received in respect of an employment where the options are granted to directors in consideration for the services to be performed as directors.
The foregoing opinions are not rulings and, in accordance with the guidelines set out in Information Circular 70-6R2 dated September 28, 1990, are not binding on the Department.
We trust our comments will be of assistance to you.
Yours truly,
for Director
Financial Industries Division
Rulings Directorate
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