In the course of the acquisition of shares in the capital of a Corporation, it cancels stock options of certain employees for an amount corresponding to the shares' value. However, as the final determination of the per share purchase price depends on the outcome of litigation to which the Corporation is party, part of the agreed amount is retained. Must the retained amount be included in the value of the consideration for the disposition of the stock options pursuant to s. 7(1)(b)? Can an employee request an amendment of the employee’s tax return for the year of disposition of the stock options if, in a subsequent year, the retained amount is not paid to the employee? CRA responded (TI translation):
[T]he term "value of the consideration for the disposition" under paragraph 7(1)(b) includes a receivable from the employer. Therefore…if the agreed price for the options includes the amount retained at the moment of the disposition of the stock options subject to a possible future reduction, the retained amount would be a part of the value of the consideration for the disposition under paragraph 7(1)(b).
Furthermore, if the employees have received a benefit described in paragraph 7(1)(b) which has been correctly treated as taxable in the year of disposition of the stock options, the employees would not be able to amend their declared income for that year.