Hi Tim,
We'll connect shortly to discuss, however I'm told the answer is neither. I
understand from Gerri that the equity would be considered profits interest.
We may have a better solution here, which will be more advantageous to you.
On Thu, Dec 28, 2023 at 2:32 PM Timothy Thomas <tt@thekey.com> wrote:
> Thanks Chad,
>
> Could you please clarify if these are considered Restricted stock units
> (RSUs) or stock options?
>
> On Thu, Dec 28, 2023 at 1:50 PM Chad Everitt <chad.everitt@thekey.com>
> wrote:
>
>> Hi Tim,
>>
>>
>> - Generally, a number of complex tax matters can arise when a
>> non-resident of Canada issues stock-based compensation to Canadian
>> employees.
>> - Often U.S. plans – as you point out below – do not have the same
>> tax implications to Canadian employees as they do for non-resident
>> employees – as examples, Canadian tax rules take a different approach re
>> timing of taxability (i.e., grant vs. vesting, etc.), interpretation of
>> ‘substantial risk of forfeiture’, etc.
>> - There can also be Canadian withholding and reporting requirements,
>> notwithstanding that a non-resident is issuing the stock-based comp.
>> - From a very quick glance at the plan you attached, there may be an
>> immediate income inclusion for the recipient on issue, although we’d have
>> to do further work to confirm. If there was, TheKey Holdings, LLC may be
>> required to withhold tax in relation to the issuance of the units and could
>> be subject to the same payroll reporting requirements as you are familiar
>> with for Canadian employers.
>> - Overall, this is actually quite a complex area of tax. We have a
>> specialty group that focuses almost exclusively on cross-border stock based
>> comp.
>> - Often, there are number of options when looking at cross border
>> plans, including just accepting the tax implications irrespective of fact
>> that they may not be the same as for non-Canadian participants in the plan,
>> considering issuing a different plan that is more closely aligned with
>> Canadian rules, or in some cases, we have seen clients simply pay other
>> forms of compensation to avoid the complexities. The latter may be
>> desirable if for example, there was only a small amount of employees
>> impacted and it made economic sense.
>>
>>
>>
>> --
>> Chad Everitt
>> President- East Division
>>
>
>
> --
> Tim Thomas
> Head of Canada Division
> *Please note my email has changed:*
> tt@TheKey.com <tt@thekey.com>
> (514) 591-9387
> TheKey.ca <https://www.thekey.ca/>
> [image: TheKey] <https://www.thekey.com/>
>
Chad Everitt
President- East Division