Hugessen,
J.
[Orally]:—This
appeal
is
entirely
without
merit.
The
appellant
was
granted
a
stock
option
by
his
employer.
The
option
price
was
the
price
at
which
the
shares
traded
on
the
Exchange
at
the
time
the
option
was
granted.
When
the
appellant
came
to
exercise
his
option,
some
years
later,
the
shares
were
trading
at
a
higher
price.
The
Minister
assessed
him
for
the
difference
pursuant
to
paragraph
7(1)(a)
of
the
Income
Tax
Act,
S.C.
1970-71-72,
c.
63.
7.
(1)
Subject
to
subsection
(1.1),
where
a
corporation
has
agreed
to
sell
or
issue
shares
of
the
capital
stock
of
the
corporation
or
of
a
corporation
with
which
it
does
not
deal
at
arm's
length
to
an
employee
of
the
corporation
or
of
a
corporation
with
which
it
does
not
deal
at
arm's
length,
(a)
if
the
employee
has
acquired
shares
under
the
agreement,
a
benefit
equal
to
the
amount
by
which
the
value
of
the
shares
at
the
time
he
acquired
them
exceeds
the
amount
paid
or
to
be
paid
to
the
corporation
therefor
by
him
shall
be
deemed
to
have
been
received
by
the
employee
by
virtue
of
his
employment
in
the
taxation
year
in
which
he
acquired
the
shares.
Subsection
7(1.1)
is
not
in
play.
The
appellant
argues
that
"the
value
of
the
shares
at
the
time
he
acquired
them"
is
the
option
price.
He
is
plainly
wrong.
He
acquired
the
shares
only
at
the
time
he
exercised
the
option,
not
when
it
was
granted.
There
is
no
basis
for
thinking
that
their
value
then
was
any
different
from
that
of
all
other
outstanding
shares
of
the
same
class.
That
value,
by
the
classic
test,
is
the
price
that
would
be
willingly
paid
by
a
buyer
who
does
not
have
to
buy
to
a
seller
who
does
not
have
to
sell.
That
is
not
the
option
price,
for
the
optionor
is
under
an
obligation
to
sell;
it
is
the
price
freely
established
on
the
Exchange
on
the
date
of
acquisition.
The
Minister's
assessment
was
correct
and
the
trial
judge
was
right
to
uphold
it.
The
appeal
will
be
dismissed
with
costs.
Appeal
dismissed.
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