Tax memo: Deduction Denied for Amounts Paid to Employees for Stock Options in course of Going-Private Transaction (Imperial Tobacco case)

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In Imperial Tobacco Canada Limited v. The Queen, the Tax Court of Canada (TCC) held that payments made by Imperial Tobacco to its employees to eliminate an employee stock option plan (SOP) in the context of a going-private transaction were capital in nature and not deductible. The Court distinguished an earlier TCC decision, involving the same going-private transaction, in which a payment made by Shoppers Drug Mart was held to be deductible.

Get the facts in this Tax memo.