Stock Options Relief Form Released February 4

The CRA has released a form to enable the special relief provision for employees who have or will dispose of securities for which a stock option benefit has been deferred: Form RC310 Election for Special Relief for Tax Deferral Election on Employee Security Options.

This form can be used for security options exercised before 4 PM on March 4, 2010, as the deferral option is no longer available for security options exercised after that date and time. It allows taxpayers to elect a special tax that is equal to the proceeds of the disposition of the securities in lieu of the tax payable on the security option benefit, if this is to the taxpayer's advantage. The due date for the election is the 2010 filing due date for securities sold prior to 2010 and the filing due date for the year of sale for securities sold after 2009. This election is only available for securities that are redeemed before 2015.

This special relief will be most beneficial for employees who sold their securities during the economic downturn of 2008 and 2009 at significant losses. It is important that the form be completed carefully to determine if the special tax is less than the tax owing on the security option benefit. CRA notes on the form that if capital losses triggered by disposing of the securities in previous years have been applied already, the election may not be of benefit to the employee. CRA will determine if this is the case and will not process elections that are not to the employee's advantage.

ADDITIONAL EDUCATIONAL RESOURCE: Advanced Tax Preparation and Research, Distinguished Advisor Workshop Journal