If a security option (a share of a corporation's capital stock or a mutual fund trust unit) is granted to one of your employees or to an employee of a qualifying person (a corporation or a mutual fund trust) with which you are not dealing at arm's length, and the option is granted under an agreement that allows the employee to acquire such a security from their employer or the qualifying person, there is no taxable benefit for the employee at the time the option is granted.

The employee is generally deemed to receive a taxable benefit in the year in which they acquire the security or transfer a right under the agreement, unless the security is a Canadian-controlled private corporation (CCPC) share that a CCPC agreed to issue or sell to a CCPC employee.

The employer who grants the benefit has to file an RL-1 slip (see courtesy translation RL-1-T) for the employee.