2022-0929511C6 STEP 2022-Q17-Deceased Taxpayer and Stock Options
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether a deduction under paragraph 110(1)(d) is available in circumstances where paragraph 7(1)(e) applies?
Position: Yes
Reasons: 2017 amendments.
Author:
Schnitzer, Irina
Section:
7
2022 STEP CRA Roundtable – June 15, 2022
Question 17. Deceased Taxpayer and Stock Options
On death, an individual holding stock option rights is deemed to have disposed of those rights immediately before death - pursuant to paragraph 7(1)(e) of the Income Tax Act - at the value of those rights immediately after death.
CRA has stated in views 2009-0327221I7 and 2011-0423441E5 that the 50% deduction allowed under paragraph 110(1)(d) of the Act is not permitted to a deceased taxpayer.
Since providing the views above, paragraph 110(1)(d) has been amended to make specific reference to paragraph 7(1)(e) (see subparagraph 110(1)(d)(i)).
Does CRA agree that the 50% deduction is now allowed by a deceased pursuant to the amendment?
CRA Response
The CRA agrees that as a result of the 2017 amendments to paragraph 110(1)(d) the deduction is now available to a deceased taxpayer in circumstances where paragraph 7(1)(e) applies, provided that all of the conditions of paragraph 110(1)(d) are met.
The 2017 amendments also included consequential amendments to subsection 110(1.1) (employer election to forego deduction) to ensure its proper application in circumstances where paragraph 7(1)(e) applies.
Irina Schnitzer
2022-092951
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