I work for a Canadian branch of a U. As incentives, we receive both stock option grants and restricted stock units. I believe that stock options are essentially taxed as capital gains. I found the above info in the fourth paragraph of the section Taxable Income — Employee Security Options Deduction available here.

But is that taxed as ordinary income or is there anything in place to give RSUs the same preferential tax treatment as options? Thanks for the question because I had to search for information on restricted stock.

Employee stock options work exactly as you describe. Employees are given an option to purchase company stock at a certain price subject to a vesting schedule. Restricted stock awards RSAalso called incentive stock awards, are shares granted in your name as of the date of grant and held in escrow.

Restricted Stock Units (RSUs) and Backup Withholding | TaxAct

The shares will not be restricted upon vesting allowing you to sell the shares. Canadian tax treatment of stock options is favourable as you describe. Restricted Stock Units RSU provides similar benefits as RSA but instead of actual shares, employees receive an opportunity to receive stock in the future. This article suggests that RSUs are not taxed at grant and my understanding based on this article is that when RSUs vest and are converted into company stock, the value of the stock at the time of vesting will be considered as ordinary income and taxed at your marginal rate.

Hahaha, I could have sworn I posted a similar comment in one of the threads — maybe at MDJ. I used the sell-to-cover option, which means almost half my shares were sold to pay off the taxes. The rest of the shares I was able to sell for a profit.

Stock options are far superior… and unfortunately I joined the company too late as earlier employees got options.

They stand to gain so much more because they also received more options, plus they save a lot in taxes. The trouble with options is that if they are underwater, they are worthless.

RSUs are better because if the stock falls during the first year, at least there is some profit, albeit less than what you could have if the stock had irs restricted stock options up. Having said that companies tend to give out far fewer RSUs than options and if there is a profit, options are better from a tax point of view.

I only wish I had options because the company has done very well since I joined. Heck, I should have bought stocks when I joined… I have the benefit of hindsight of course. In the document best penny stocks to invest in 2016 in india to — http: Or is the subsiduary considered a CCPC and thus the point is moot?

Or can this CCPC point be ignored? You can simply ask your finance department if your employer is treated as a CCPC. Also, if you make charitable donations look at donating some of the proceeds of your stock option gains to charity and you will not only get the charitable deduction but you will also not have to pay the tax on the portion donated.

Kind of a double benefit. Much better then donating with after tax qualities of a successful forex trader. The other advantage of options versus RSUs is that with options you can defer the taxable benefit until the shares are sold http: In my case, this would be especially useful if this were indeed the case.

Tax Topics - Topic Stock Options

I have to pay taxes on RSUs that vested inand for which the FMV at vesting is twice as much as it is today. New withholding taxes on stock option benefits Canadian Capitalist. Tax Treatment of Restricted Stock Unit RSU Benefits Canadian Capitalist. Hi there, I appreciate the above questions and comments.

I have a particular situation that is slightly different, and would love clarification. I work for the Candian division of a US based company that has awarded me RSUs, with varying vesting dates. My company however includes the FMV of the awarded units in the year it was granted, in my income statements at the end of the year. As the shares vest, for ex. I had two grants awarded to me inthat vested in I recieve release statments from the US stock holding company outlining a taxable compenstation for the vested stock.

I dont have to claim the vested amount do I, as I already paid tax at the grant date?? I am reading that this is only permitable under Restricted shares and not units, so I am confused.

Sounds like the RSUs you were awarded work differently. I have the same situation. Does that mean I already paid taxes?

How this should be reflected on my tax report? Will this mean we have to pay more after income tax? My position is being eliminated and I am taking a demotion. The company has advised me that I will only receive the vested portion of the stock. Do I have any rights to the total amount since I am staying on and not being laid off?

Your email address will not be published. This post has been updated as of Jan. Home Bookshelf In the News Archives Contact Us Consulting Forum. Reader Question on Restricted Stock Units December 19, at 9: Reader Kevin sent the following question on restricted stock units: This article has 14 comments Calvin December 19, at 3: I too work for a Canadian office of a US company and received a grant of RSUs.

Canadian Capitalist December 19, at 3: Calvin December 19, at 4: Mike L December 31, at 3: Thanks for a particularly timely post and any follow up answer you can provide or point out! Canadian Capitalist December 31, at 9: Bryce January 1, at Pep February 11, at 8: Jared March 27, at 4: Thanks for any info in advance.

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