Employee Stock Purchase Plan

  • Cathy StinzianoCathy Stinziano
    Member since Apr 2022

      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?

      July 28, 2023 at 13:48
    • Kathryn HillKathryn Hill
      Board of Advisors

        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.

        August 5, 2023 at 01:06
        • Cathy StinzianoCathy Stinziano
          Member since Apr 2022

            Thanks Kathryn and yes, we have been having meetings with finance and our tax department so everyone is on the same page.

            August 10, 2023 at 11:58
        • Harman Dhatt PCPHarman Dhatt PCP
          Member since Sep 2022

            Hi Cathy,
            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.

            August 11, 2023 at 12:53
          • Susan SamudaSusan Samuda
            Member since Sep 2022

              Hi Cathy,
              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.

              August 16, 2023 at 22:05