Election Respecting Security Options
For security options issued after 4 p.m. Eastern Standard Time on March 4, 2010, as a rule, an employee who acquires securities from his or her employer at the time the option is exercised may claim the security option deduction. However, if an employee takes an option cash-out payment without acquiring any securities, he or she may claim the deduction if you elect that the cash payment made to or on behalf of the employee not be deducted by you or by any person with whom you are not dealing at arm’s length.
If you make this election, you must enter "L-8" in a box in the centre of the employee's RL-1 slip (RL-1), followed by the amount of the payment or, in the empty space in the centre of the slip, write "Election respecting security options" (or " Choix lié aux options d’achat de titres"), followed by the amount. The employee will thus be able to claim the security option deduction on his or her income tax return.
For more information on the security option deduction, see the brochure Taxable Benefits (IN-253-V).