Canadian Tax Issues for ESOPs
The Canadian tax deadline is May 1st and as we all know only two things in life are certain – death and taxes. And for a lot of people doing taxes is a death defying experience.
ESOPs or Employee Share Ownership Plans have special tax related issues. There are three types of ESOPs in Canada.
- The one most widely known as an ESOP is a share equity plan. Share equity plans are the transfer of legal title of an ownership percentage in the company and can include voting or non-voting shares.
- Stock option plans are based on a company promise to the employee to allow them the right to buy shares at some time in the future but at today’s price.
- An Equity Value Plan (EVOP™) is a unit of ownership that mirrors the rights and value of an actual share. It has no legal status but is governed by the unit holder agreement.