In a recent Globe & Mail article, David Milstead considers how the capital gains inclusion rate changes proposed in Budget 2024 will impact executives compensated, in whole or in part, through stock options. Currently, since 2021, only a certain amount of employer-granted options can be considered "qualified" and eligible for a capital gains-like tax deduction. Taking this into account, the proposed Budget 2024 changes to the inclusion rate are likely to be far more deeply felt by lower-level executives with fewer options.

Paul Carenza, a partner in our Tax Group, shared his perspective on the proposed changes with David immediately following the budget announcement: “Taken as a whole, the 2021 changes and the 2024 proposal really take a bite out of the preferential treatment for options,” he said. “If the optionee is a C-suite executive in a large company, then the impact of the 2024 proposal may be modest. In other cases, it is quite impactful.”

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Read our full Budget 2024 tax analysis here.

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