Formerly, CRA generally had presumed for purposes of applying the domestic provisions of the Act (s. 115(1)(a)(i)) that an employee stock option benefit is in respect of employment exercised by the employee in the year in which the option was granted for purposes of determining the portion of the stock option benefit which was attributable to the exercise of Canadian employment of the optionee.
However, for stock options exercised after 2012, the CRA will apply the principles set out in para. 12 to 12.15 of the OECD Commentary on Article 15 to allocate a stock option benefit for purposes of the Income Tax Act, unless an income tax treaty otherwise specifically applies. Under these principles, the stock option benefit typically will be allocated based on the number of days of employment exercised in Canada during the vesting period compared to the total number of days of exercise of employment during that period.