Income Tax Act — I-3.3 7
Agreement to issue securities to employees 7 (1) Subject to subsection (1.1), where a particular qualifying person has agreed to sell or issue securities of the particular qualifying person (or of a qualifying person with which the particular qualifying person does not deal at arm’s length) to an employee of the particular qualifying person (or of a qualifying person with which the particular qualifying person does not deal at arm’s length), (a) if the employee has acquired securities under the agreement, a benefit equal to the amount, if any, by which (i) the value of the securities at the time the employee acquired them exceeds the total of (ii) the amount paid or to be paid to the particular qualifying person by the employee for the securities, and (iii) the amount, if any, paid by the employee to acquire the right to acquire the securities is deemed to have been received, in the taxation year in which the employee acquired the securities, by the employee because of the employee’s employment; (b) if the employee has transferred or otherwise disposed of rights under the agreement in respect of some or all of the securities to a person with whom the employee was dealing at arm’s length, a benefit equal to the amount, if any, by which (i) the value of the consideration for the disposition exceeds (ii) the amount, if any, paid by the employee to acquire those rights shall be deemed to have been received, in the taxation year in which the employee made the disposition, by the employee because of the employee’s employment; (b.1) if the employee has transferred or otherwise disposed of rights under the agreement in respect of some or all of the securities to the particular qualifying person (or a qualifying person with which the particular qualifying person does not deal at arm’s length) with whom the employee was not dealing at arm’s length, a benefit equal to the amount, if any, by which (i) the value of the consideration for the disposition exceeds (ii) the amount, if any, paid by the employee to acquire those rights is deemed to have been received, in the taxation year in which the employee made the disposition, by the employee because of the employee’s employment; (c) if rights of the employee under the agreement have, by one or more transactions between persons not dealing at arm’s length, become vested in a person who has acquired securities under the agreement, a benefit equal to the amount, if any, by which (i) the value of the securities at the time the person acquired them exceeds the total of (ii) the amount paid or to be paid to the particular qualifying person by the person for the securities, and (iii) the amount, if any, paid by the employee to acquire the right to acquire the securities, is deemed to have been received, in the taxation year in which the person acquired the securities, by the employee because of the employee’s employment, unless at the time the person acquired the securities the employee was deceased, in which case such a benefit is deemed to have been received by the person in that year as income from the duties of an employment performed by the person in that year in the country in which the employee primarily performed the duties of the employee’s employment; (d) if rights of the employee under the agreement have, by one or more transactions between persons not dealing at arm’s length, become vested in a particular person who has transferred or otherwise disposed of rights under the agreement to another person with whom the particular person was dealing at arm’s length, a benefit equal to the amount, if any, by which (i) the value of the consideration for the disposition exceeds (ii) the amount, if any, paid by the employee to acquire those rights shall be deemed to have been received, in the taxation year in which the particular person made the disposition, by the employee because of the employee’s employment, unless at the time the other person acquired the rights the employee was deceased, in