Cashless Stock Options 

 

Stock Options are incentives given to employees as part of their compensation plan.  The option gives them the right to acquire shares in the company of employment at a set price (the exercise price) on a certain future date (the exercise date).

Steps to follow when exercising a cashless stock options:

  1. A signed Instruction Letter must be forwarded to the company detailing the exercise amount. (sample to be provided)

  2. The Company's letter is also required.  

    • Note, Each company has their own Stock Option Exercise letter with their own legal language. The letter should contain name, quantity amount, cost per share, expiry date, signed by an authorized individual. It should state that they will issue shares based on the Instruction Letter.

Upon receipt of the above:

  1. We will sell the securities equal to the quantity stated in the stock option Instruction Letter.

  2. The exercise cost will be debited from your account and a cheque will be couriered to the issuer. 

  3. Upon receipt of the  share certificate it will be booked in account (expected turn around time is 3 business days or less).

Tax Considerations:

  • The difference between the Fair Market Price (FMV) of the shares upon exercise and the Exercise Price of the options, is taxed as EMPLOYMENT INCOME;

    • for Canadian-Controlled Private Corporations (CCPC), inclusion in income will occure upon selling the shares.

    • for Publicly Traded Companies, inclusion in income will occure upon exercising the shares.

To further ellaborate, please contact us so we can assess your particular situation. 

Please note that only Echelon Wealth Partners is a member of CIPF and regulated by IIROC; *Chevron Wealth Preservation is not regulated by IIROC nor is it protected under the CIPF