Federal government halting changes to employee stock options

The federal government is putting a pin in its changes to employee stock options, which were supposed to take effect on Jan. 1.

In a news release, the federal finance ministry said it’s reviewing feedback from consultations on the proposed changes and will announce its path forward and a new implementation date in its 2020 budget.

The proposed changes, released in June, would have put an annual cap of $200,000 on employee stock options eligible for the relevant deduction under the Income Tax Act. They also would have made employer deductions available for the option benefits realized by employees.

Read: Feds publish draft proposals on changes to employee stock options

The proposed annual cap wouldn’t apply to options granted by Canadian-controlled private corporations, as well as companies classified as startups, emerging or scale-up companies. The consultations, which wrapped up in mid-September, sought to determine the characteristics of those companies.

“We will carefully consider the views of stakeholders as we move forward to ensure that Canada’s tax system is being used to support jobs and growth, rather than creating unfair tax advantages that disproportionately benefit the wealthy,” said Finance Minister Bill Morneau in the release.

Read: Budget’s stock options proposals could have consequences for employers