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Tuesday, May 26, 2009

Your Tax System at Work

Just because you never made money, doesn't mean they can't take it from you:

Thousands of Canadian workers who purchased stock options from their employers before the market downturn are expected to pay millions of dollars in taxes on income they haven't received because the shares have lost their value.

"I had to take out over a hundred thousand dollars in loans, plus interest, in order to pay off taxes," said marketing manager Shannon McLeod, a tech-industry worker in Vancouver who faced the same situation several years ago.

"I was a good little Canadian taxpayer and I paid it off, but it had a huge effect on me."


For example, if an employee bought $100,000 worth of stock for the employee price tag of $25,000 early in 2008, they would be taxed on $75,000 worth of "income" for that year. If the employee held on to their stock, as many do, they would still have to pay tax on the $75,000 — even if the stock's value drops to mere pennies. Employees can defer remitting the tax until they sell the stock or the company is sold, but the tax bill doesn't change.


Finance Minister Jim Flaherty indicated Ottawa has no plan to help affected taxpayers.


The United States had a similar tax policy until 2008, when the law was changed to essentially fix the problem for American employees who lost money through stock options.

"The fact that we are the only G7 country to do this still is kind of embarrassing. It's pretty archaic," McLeod added.

In what real sense is this a conservative government?

Posted by Richard Anderson on May 26, 2009 | Permalink


"In what real sense is this a conservative government?" Its not. The conservative party in this country has been on a steady march to the center ever since Preston Manning left the Reform party. With things the way they are the party is now sprinting to the left. Government as a structure is massively left so even if a right wing party got in , it would have a lot of left wing red tape to cut through but this party seems to be embracing it.

Posted by: Ross Mann | 2009-05-26 10:31:29 PM

There is nothing...absolutely nothing moral or justified in the way the CRA works. In fact they share a play book with communists the world over.

Posted by: JC | 2009-05-27 4:01:09 PM

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