19(1)
Re: "Amount Payable" Subparagraph 110(1)(d)(iii) of the Income Tax Act ( the "Act")
We are writing in reply to your letter of August 23, 1991, wherein you requested that we confirm your understanding of the Department's position on the application of the above-noted subparagraph. In this regard, you forwarded a copy of a previous opinion given by this Directorate on this issue.
In this regard, it is your understanding that the Department's position is that subparagraph 110(1)(d)(iii) of the Act would be satisfied in a situation where there are several possible exercise prices under a stock option agreement, provided that the price on the actual exercise is not less than the fair market value of the share at the time the option was granted.
Our Comments
It is our opinion that the deduction under subparagraph 110(1)(d)(iii) of the Act will be available to a taxpayer, where the exercise price of the share is equal to or greater than, the fair market value of the share at the time the option is granted.
We trust our comments will be of assistance to you.
Yours truly,
D. Fuoco for DirectorBusiness and General DivisionRulings DirectorateLegIslative and Intergovernmental Affairs Branch