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Does anyone have experience with administering the payroll side of this type of plan?
I believe it requires: setting up taxable benefit for the difference between the stock price and the employees’ discounted price on the purchased stocks; a deduction code for collecting the employees funds to purchase the stock; and a refund code if employee terminates before purchasing stock and needs to be refunded for unused deductions toward purchase. Tax form reporting is Box 14 and 38 on T4 and Box A and L for RL-1. Is there anything else that is required or that I may have incorrect?
Cathy, I worked with share purchase plans many years ago and your steps above sound reasonable. What I might do is talk to your internal finance tax/audit department for their interpretation of the CRA rules. I sometimes talked things like this over with external auditors if you are comfortable with that. You can always reach out to CRA or NPI infoline if you have a specific question.
Thanks Kathryn and yes, we have been having meetings with finance and our tax department so everyone is on the same page.
I also worked with share purchases. You are right; you will be selecting a taxable benefit for the difference between the stock price and employee purchase. Your steps are correct.
Your set up sounds fine. The suggestion I have is to make sure your refund code will work without the employee getting paid a pay. Sometimes you will find you make need to do a refund after termination when there is no pay.
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