Section 7 of the Income Tax Act (Canada) does not apply to stock options granted to a CCPC for consulting services rendered. Instead, “general tax principles” apply to determine when the CCPC must include an amount in income in respect of the options. In general, under subsection 9(1) the CCPC will be required to include in income the value of the underlying share over the exercise price of the option on the date of its grant where the option is issued as payment for services rendered. If, however, the CCPC renders the services after the grant date and the option vests only after the CCPC meets certain conditions, it will be required to include an amount income when the services have been rendered and the conditions met.
CRA technical interpretation 2019-0796641E5 dated June 7, 2022.
