Economic statement includes new rules for employee stock options

In Monday’s fall economic statement, the federal government proposed changes to employee stock option rules and offered additional support for essential workers.

The statement provided an overview of the government’s approach to combating the ongoing coronavirus pandemic, while offering details on additional measures moving forward.

The changes to employee stock option tax rules include an annual limit of $200,000 that will apply on stock option grants that can qualify for the employee stock option deduction under the Income Tax Act. The new rules will apply to employee stock options granted on or after July 1, 2021, according to the statement. Employee stock options granted by Canadian-controlled private corporations, as well as non-CCPC employers with annual gross revenues of $500 million or less, won’t be subject to the new limit.

Read: Federal government halting changes to employee stock options

While the federal government initially announced changes to employee stock option rules in June 2019 with an implementation date of Jan. 1, 2010, it halted the changes last December to review feedback from consultation.

In an effort to support essential workers, the economic statement said the government will work with labour and health-care unions to seek solutions to improve retention, recruitment and retirement savings options for low- and modest-income workers, particularly those without existing workplace pension coverage.

Further to announcements in the 2019 federal budget, the statement also shed further light on steps toward the implementation of a national pharmacare program. In particular, it said Health Canada will be setting out options for the previously announced national strategy for high-cost drugs for rare diseases in the coming weeks, engaging with provinces, territories, patients, industry and other interested groups to confirm the path forward.

And remote workers with modest expenses in 2020 will be able to claim up to $400 based on the amount of time spent working from home. Employees won’t be required to track detailed expenses and will generally not request a signed form from their employer, the statement said.

Read: Budget 2019: Feds to develop a strategy for high-cost drugs for rare diseases