The British Columbia Technology Industry Association (BCTIA) has asked for a wholesale review of the way stock option compensation is taxed in Canada.
The industry advocacy group acknowledged that such a review would take time but, in the interim, is calling on the federal government to abandon changes proposed in the 2010 budget.
“While the system was imperfect prior to the 2010 Budget changes, it’s one that companies at least understand how to navigate,” said BCTIA president Pascal Spothelfer in a letter to members of B.C.’s tech community.
The BCTIA will be rallying industry in coming weeks, working with its counterparts in other provinces and meeting with MPs to push revisiting the proposed changes.
Spothelfer said, “The government has opted to fix problems with Canada’s stock option compensation with additional rules and administration, rather than tackling the two fundamental underlying issues.”
The two issues are: an overly complex process that has special rules for each class of company; and taxation of virtual gains instead of real gains.
“By taxing employees when stocks options are exercised, the government taxes virtual gains, not actual gains, without allowing those gains to be offset with corresponding losses,” said Spothelfer.
The BCTIA is asking members of the technology community to have their say by answering a survey about stock option compensation.
The BCTIA will use the survey results to make its case to Ottawa.