All About Estates

Stock options held at death

The Department of Finance released a Notice of Ways and Means including amendments to the tax rules of interest to executors and personal representatives. One such amendment dealt with the security option benefit of the deceased.

Included in the amendments was a proposal to permit a deduction in computing the taxable income of a deceased taxpayer who is deemed to have received a security option benefit in the taxation year in which he or she died (provided certain conditions are met).

This amendment applies to acquisitions of securities and transfers or dispositions of rights occurring after 4:00 p.m. ET on 4 March 2010. This amendment addresses situations currently covered by Canada Revenue Agency administrative position. In addition, the prescribed share requirements (re. the expected period without share redemptions, paid-up capital reductions, etc.) are amended to add a new exception to ensure a share is not precluded from being a prescribed share in certain situations where a certain tax-deferred exchange or disposition occurs. This amendment, which responds to a 29 November 2012 comfort letter issued by the Department of Finance, applies to the 2012 and subsequent taxation years.

Soon executors and personal representatives will no longer have to rely on an administrative position.

About Derek de Gannes
Derek A. de Gannes: Director, Domestic & International Tax of RSM Canada. RSM Canada is committed to the highest level of integrity, quality and professionalism and provides clients with solutions in the area of Audit, Tax and Transaction Services. Email: derek.degannes@rsmcanada.com