Following the introduction of s. 153(1.31), the employer's withholding obligations respecting stock option benefits will apply even where the employee's only remuneration in the taxation year is in the form of such benefits. In this regard, CRA stated:
[F]ollowing the enactment of new subsection 153(1.31), we are of the view that an employer can no longer relieve itself of its obligation to withhold and remit the amount of Deductions, where there is a taxable benefit under paragraph 7(1)(a), by reason only of the amount deemed to be paid as a benefit under paragraph 7(1)(a) being a non-cash benefit that was the only remuneration paid to that employed person during a particular pay period or where the remuneration or other monetary benefits paid in a particular pay period would be insufficient to cover the amount of the Deductions.
... [A]lthough we are aware that in those situations the employer will have to find a solution to ensure compliance with its obligation to withhold and remit the Deductions, we are not able to comment or provide any potential solutions.