This loophole lets Canada’s richest CEOs dodge almost $1 billion in taxes
Most people have heard of the Panama and Paradise Papers, which documented how the super-rich stash their money in offshore bank accounts.
But fewer people are aware of another lucrative tax perk for the rich that will cost the Canadian public $840 million this year: The Stock Option Deduction loophole.
The stock option loophole allows people who receive stock options as part of their compensation to pay only half the rate at which normal income is taxed.
Because of the loophole, big corporations are increasingly compensating their executives with stock options. For example, in Donald Walker, the CEO of Magna International, received a base salary of $415,000 plus an additional $3.6 million in stock options. Only half of the $3.6 million Walker gained from the stock options grant will be taxed.
Rampant abuse of the stock option loophole is costing the Canadian public $840 million per year, according to Finance Canada. A comprehensive report on corporate executive pay found that stock options now account for nearly 50% of CEO compensation, representing an enormous harm to Canadian taxpayers — and a windfall for the richest few.
In 2018 we are fighting to close tax loopholes for the rich — add your name to join us and be a part of making Canada’s economy work for the many.