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.
APFF - 1995
Question 49
Follow-up to question 7 from the 1994 Round Table on the Federal Taxation
The Department informed us in October 1994 that it was re-examining its interpretation of paragraphs 7(1)(b), 7(3)(b) and 110(1)(d) in situations where an employee could elect to receive a cash payment instead of shares under a share purchase agreement. Has the Department completed its review?
Answer by the Department of Revenue
The Department’s position concerning share purchase agreements that allow an employee to receive a payment in cash rather than shares has not changed. When the employee, but not the employer, has the right to choose a cash payment rather than shares, paragraph 7(1)(b) applies to include in the employee’s income the benefit resulting from the exercise of this right. The Department is also of the view that an employee is entitled to the deduction under paragraph 110(1)(d), provided the conditions described therein are met. Also, paragraph 7(3)(b) does not prevent an employer from deducting the amounts paid, since no shares were sold or issued under the agreement.
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