On a sale of a corporation, the outstanding employee stock options are surrendered for a price reflecting the sale price for the shares. However, as the sale price depends on the outcome of litigation, part of the agreed amount for the option surrenders is retained until the action is settled.
CRA indicated that if the price expressed to be payable for the surrendered options included the contingent amount, it would be included in the employees’ income arising under s. 7(1)(b), and that if it was not subsequently received, they would not be able to amend their returns for the year of surrender to then exclude the amount from their income.