By now, you may have heard or read that in 2019, the Department of Finance Canada tabled legislation which related to limiting the preferential stock option treatment enjoyed by employees in Canada. Now in 2021, with updated draft legislation and inclusion with the 2021 Federal Budget, Bill C-30 could significantly impact many employees who receive stock options granted to them on or after July 1, 2021.
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Just when you may have thought cross-border taxation was getting simpler, the Canada Revenue Agency (CRA) recently put forward Technical Interpretation (CRA Views 2019-0832211I7) to provide further guidance on the concept of sourcing a cross-border employee’s compensation when in receipt of Restricted Stock Unit (RSU) benefits. What the CRA has brought forward is a new methodology of sourcing and is referred to as the “Hybrid Methodology.” They have stated this methodology will be their approach as of the 2021 tax year.
Before you send an employee off on a new assignment in Canada, there are a few things they could probably use: a warm parka, an introductory guide to ice hockey, and a thorough understanding of Canadian tax law.
For employees working in any country, understanding the tax system is crucial to avoiding unnecessary risks and costs. When it comes to Canada, this starts with determining whether your mobile employee will be considered a Canadian resident or be considered a non-resident business traveler.