Accounting and Taxes Thread

[Lubicon]

Maybe a long shot here but a question regarding capital gains on employee stock options.

I have (had) a small amount of options at work. When I exercised them I opted for immediately selling and taking the money rather than actual stock. So of course there is withholding tax, which is fine. Fly in the ointment is when I first started we did not have that option, you had to physically take ownership of the stock. And we did not have an automated system so it was all done manually with stick certificates sent to you and everything. Due to a glitch when I exercised those and the time delay to get tit sorted out the market price had dropped below the strike price and kept on dropping. As a result I was way underwater on these when I actually sold them.

so questions are:
1. can I claim a capital loss on those shares? It's a significant amount
2. are the withholding taxes considered capital gains and can I claim that back against the capital loss from quetion 1 (if applicable).


Is that considered capital gains tax?

[fotze2]

Hehehe tit.

[Locke]

Originally Posted by Lubicon

Maybe a long shot here but a question regarding capital gains on employee stock options.

I have (had) a small amount of options at work. When I exercised them I opted for immediately selling and taking the money rather than actual stock. So of course there is withholding tax, which is fine. Fly in the ointment is when I first started we did not have that option, you had to physically take ownership of the stock. And we did not have an automated system so it was all done manually with stick certificates sent to you and everything. Due to a glitch when I exercised those and the time delay to get tit sorted out the market price had dropped below the strike price and kept on dropping. As a result I was way underwater on these when I actually sold them.

so questions are:
1. can I claim a capital loss on those shares? It's a significant amount
2. are the withholding taxes considered capital gains and can I claim that back against the capital loss from quetion 1 (if applicable).


Is that considered capital gains tax?

There are a lot of different ways that can go, it really depends on the specifics of the issuance.

I'd speak to whomever your accounting professional is, otherwise you can PM me and I can have a look at it.

Just based on the information provided (Huge Disclaimer here) you could potentially claim Capital losses if your physically held shares were sold below what you paid for them and 'No' withholding taxes would not typically be applicable against Capital losses or gains. These two things rarely interact unless circumstances are different.

Huge grain of salt here. Because a few things seem unusual.

[bizaro86]

Originally Posted by Lubicon

Maybe a long shot here but a question regarding capital gains on employee stock options.

I have (had) a small amount of options at work. When I exercised them I opted for immediately selling and taking the money rather than actual stock. So of course there is withholding tax, which is fine. Fly in the ointment is when I first started we did not have that option, you had to physically take ownership of the stock. And we did not have an automated system so it was all done manually with stick certificates sent to you and everything. Due to a glitch when I exercised those and the time delay to get tit sorted out the market price had dropped below the strike price and kept on dropping. As a result I was way underwater on these when I actually sold them.

so questions are:
1. can I claim a capital loss on those shares? It's a significant amount
2. are the withholding taxes considered capital gains and can I claim that back against the capital loss from quetion 1 (if applicable).


Is that considered capital gains tax?

I don't know about the.capital gain part, but withholding taxes are just taxes paid. Your employer took some money from you and sent it to the government. I don't see any reason why you can't just claim that as tax paid on your return.

[DoubleF]

Originally Posted by Lubicon

Maybe a long shot here but a question regarding capital gains on employee stock options.

I have (had) a small amount of options at work. When I exercised them I opted for immediately selling and taking the money rather than actual stock. So of course there is withholding tax, which is fine. Fly in the ointment is when I first started we did not have that option, you had to physically take ownership of the stock. And we did not have an automated system so it was all done manually with stick certificates sent to you and everything. Due to a glitch when I exercised those and the time delay to get tit sorted out the market price had dropped below the strike price and kept on dropping. As a result I was way underwater on these when I actually sold them.

so questions are:
1. can I claim a capital loss on those shares? It's a significant amount
2. are the withholding taxes considered capital gains and can I claim that back against the capital loss from quetion 1 (if applicable).


Is that considered capital gains tax?

There's potentially more than one mechanic at play here. You may need to calculate both capital gains/losses for exercising options as well as share disposal. Check old T4 slips to see if there's information in a box 39 and/or check old employment agreements for ESO/RSU value. That number may end up significantly different of an ACB than the one determined from the investment statement. This mechanic is capital gains/losses and basically ends up on Line 12700.

Then withholding tax is a totally separate mechanic and the proper method may require a ton of hurdle jumping with two different tax authorities to be recognized, even with the treaties in place. CRA HATES this stuff and will stone wall you on it. This mechanic is basically foreign tax credit ends up on Line 40500.

Even if you fudge the transaction by claiming the withholding taxes were an outlay (ie: $50K gain + $2K tax for instance vs $48K net gain), you're actually still at a huge disadvantage from not claiming the FTC correctly. The difference between these two transactions is potentially several thousand dollars of taxes still owing to the CRA vs zero for taxes already paid to the IRS.

If you acquired ESO based on employment in Canada, but the shares ended up in a US investment account and then you sold/repatriated the funds to Canada with withholding tax going to the IRS... God speed. I ain't willingly touching that stuff again and I hear it's only gotten more infuriating over time.

Get a basic idea on what is happening in your situation. Don't be a penny wise, pound foolish. You could potentially still be ahead a few thousand dollars after paying a cross border expert several thousand dollars. I don't know the nuances of how your situation may unfold, but it's very possible to file it in a manner that CRA will accept that is disadvantageous to you.

[Mathgod]

My apologies if this has already been answered.

Jack is selling a property that he bought a very long time ago (say 50 years). The capital gains on it is the price it sold for (PoD) minus the cost to acquire it back then (ACB). But is Jack allowed to convert the ACB into today's dollars? It would seem rather silly to calculate tax owed based on the number of dollars paid in 1975 as if they were 2025 dollars, after all, they weren't 2025 dollars...

[Shazam]

You’re kidding right?

[bizaro86]

Originally Posted by Mathgod

My apologies if this has already been answered.

Jack is selling a property that he bought a very long time ago (say 50 years). The capital gains on it is the price it sold for (PoD) minus the cost to acquire it back then (ACB). But is Jack allowed to convert the ACB into today's dollars? It would seem rather silly to calculate tax owed based on the number of dollars paid in 1975 as if they were 2025 dollars, after all, they weren't 2025 dollars...

Um...no? That's not in any way how it works. Jack pays tax on the whole gain, and if its ~100% of the proceeds that are taxable then maybe Jack's descendants will start to vote for politicians with less inflationary policies.

[GGG]

Originally Posted by Johnny199r

I spoke to an CRA agent on the phone today. I told them I have exactly one slip posted on my CRA account currently vs all of them (10-15) posted at this time last year.

I was told it was the companies who had not sent them in and it was not CRA being slow this year.

How do they explain I'm holding my physical T4 in my hand but CRA expects me to believe that my employer (Provincial government) didn't send it in to the CRA like every previous year?

I asked what do I do if I have not received my slips by April 30th? She told me to just "guess' for the amounts for my tax return.

She then said I should just overestimate how much I owe and worst case scenario I would get an "automatic refund". I asked how she could guarantee it would be automatic? If slips were added later would there an an automatic reassessment? She then said she actually couldn't say for sure and needed to go speak to her supervisor.

I just gave up.

Absolute incompetence.

How is this one the CRAs fault? You don’t have your slips from your employers and investments? Just go get them from your investment accounts. It’s nice that the government does most of this but come on you should know all your sources of income and where to get the forms from those sources.

[Locke]

Originally Posted by GGG

How is this one the CRAs fault? You don’t have your slips from your employers and investments? Just go get them from your investment accounts. It’s nice that the government does most of this but come on you should know all your sources of income and where to get the forms from those sources.

Because they've spent the better part of the past decade trying to get people to be dependent upon their crap ass online system and when people acquiesce to their their crap ass system it doesnt goddamned work.

Cant have it both ways.

[Mathgod]

Originally Posted by bizaro86

Um...no? That's not in any way how it works. Jack pays tax on the whole gain, and if its ~100% of the proceeds that are taxable then maybe Jack's descendants will start to vote for politicians with less inflationary policies.

Hmm.. looks like you misunderstood what was being said. Either that or you were so busy trying to push your ideology that you didn't pay attention to what was said.

Let's try again. Jack buys a house that costs $500,000, and the next year sells it for $520,000. The capital gain is $20,000, not $520,000.

Now Jack sells a property he bought 50 years ago, paying $40,000 for it at the time, and sells it today for $500,000. You're not suggesting the capital gain is $500k, are you? It would be $460k would it not?

But adjusted for inflation and converted into today's dollars, the initial buying price is actually something like $240k. So the question was, is the capital gain $460k or $260k? Judging by the answers so far, looks like it's $460k. Just wanted to confirm.

[bizaro86]

Originally Posted by Mathgod

Hmm.. looks like you misunderstood what was being said. Either that or you were so busy trying to push your ideology that you didn't pay attention to what was said.

Let's try again. Jack buys a house that costs $500,000, and the next year sells it for $520,000. The capital gain is $20,000, not $520,000.

Now Jack sells a property he bought 50 years ago, paying $40,000 for it at the time, and sells it today for $500,000. You're not suggesting the capital gain is $500k, are you? It would be $460k would it not?

But adjusted for inflation and converted into today's dollars, the initial buying price is actually something like $240k. So the question was, is the capital gain $460k or $260k? Judging by the answers so far, looks like it's $460k. Just wanted to confirm.

There are never inflationary adjustments in taxation. Using the numbers you've provided the capital gain would of course be $460k.

I said ~100% in my previous post because it is very possible for a 50+ year real estate hold in Canada to be >95% capital gains.

[Shazam]

Wait till he finds out how eligible dividends are taxed.

[bizaro86]

Originally Posted by Shazam

Wait till he finds out how eligible dividends are taxed.

Gross!

[ken0042]

Does anybody know when the new Alberta income tax rate is due to take effect? My paycheques are still the same as they have been all year.

They said anybody making over $60k per year would see a reduction of $750; so if you get paid byweekly that should be about $29 per pay cycle.

Or is this a case of more complexities than what they are telling us about?

[Shazam]

Originally Posted by ken0042

Does anybody know when the new Alberta income tax rate is due to take effect? My paycheques are still the same as they have been all year.

They said anybody making over $60k per year would see a reduction of $750; so if you get paid byweekly that should be about $29 per pay cycle.

Or is this a case of more complexities than what they are telling us about?

It was effective Jan 1, 2025.

Your payroll admin actually has to remember to deduct things properly though.

[fotze2]

Originally Posted by Shazam

It was effective Jan 1, 2025.

Your payroll admin actually has to remember to deduct things properly though.

They are usually the lowest paid person in the company so not likely.

[Shazam]

Originally Posted by fotze2

They are usually the lowest paid person in the company so not likely.

That's just what they want you to think.

[PaperBagger'14]

Originally Posted by Shazam

That's just what they want you to think.

That’s why you never see them in the parking lot after work, they’re at the helipad.

[cSpooge]

Originally Posted by ken0042

Does anybody know when the new Alberta income tax rate is due to take effect? My paycheques are still the same as they have been all year.

They said anybody making over $60k per year would see a reduction of $750; so if you get paid byweekly that should be about $29 per pay cycle.

Or is this a case of more complexities than what they are telling us about?

The budget hasn't been passed in to law yet and until it does nothing with change.