Canada Revenue Agency outlines potential changes to RSU sourcing methodology

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EY Global
30 Mar 2021 PDF
Subject Tax Alert
Categories Mobility Tax
Jurisdictions Canada

In Internal Interpretation 2019 - 0832211I7(E) Cross-border Restricted Share Units, the Canada Revenue Agency (CRA) introduces a new methodology for sourcing restricted share unit (RSU) benefits that it refers to as the "Hybrid Methodology." Under the Hybrid Methodology, the "in the money portion" of the RSU is sourced to employee workdays in the year of grant, and any increase in value of the RSU is sourced to the vesting period. This approach has the potential to complicate the process of sourcing RSU awards.

A Tax Alert prepared by EY's People Advisory Services group, and attached below, provides additional details.

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