I-3 - Taxation Act

Section 725.5.3 Disposition versions

2022-06-08

725.5.3. Where, because of section 725.5.2, this section applies to a taxpayer in respect of an agreement, the securities to be sold or issued under the particular agreement, for each vesting year of those securities, are deemed to be non-qualified securities for the purposes of this Title in the proportion determined by the formula

A/B.

In the formula in the first paragraph,

(a)  A is the amount determined by the formula

C + D − $200,000; and

(b)  B is the aggregate of all amounts each of which is the fair market value at the relevant time of each security under the agreement that has that same vesting year.

In the formula in subparagraph a of the second paragraph,

(a)  C is the value of B in the formula in the first paragraph; and

(b)  D is the lesser of

i.  $200,000, and

ii.  the aggregate of all amounts each of which is an amount represented by B in the formula in the first paragraph in respect of securities that have that same vesting year under agreements (other than the particular agreement) entered into at or before the relevant time with the particular qualifying person referred to in section 725.5.2 (or another qualifying person that does not deal at arm’s length with the particular qualifying person), other than

(1)  designated securities referred to in section 725.5.4,

(2)  old securities within the meaning of section 49.4,

(3)  securities where the right to acquire those securities is an old right within the meaning of section 725.2.4, and

(4)  securities in respect of which the right to acquire those securities has expired, or has been cancelled, before the relevant time and in respect of which no amount is deductible under section 725.2 in computing the taxable income of the taxpayer for any year.

2022, c. 23, s. 42.