Tax laws for stock options need changing, says tech industry

At a minimum, clarification is required
||Last Updated: 09/04/2003

The Canadian Advanced Technology Alliance (CATA) will consult shortly with the Canada Customs and Revenue Agency (CCRA) and the Department of Finance in an attempt to change the tax laws governing stock options.

The subject is of particular interest to the technology industry because it often uses stock options to attract, motivate and retain key employees. Stock options allow workers to purchase shares in their employer’s company at a set price.

Now when employees exercise stock options, they pay tax on the difference between the set price and the price when the option is exercised. For example, an employee may have an option to purchase a share at $100. When he or she actually buys the share, it’s worth $300. The employee pays tax on the $200 difference.