TAX WITHHOLDING AND REPORTING FOR EMPLOYEE SHARE PLANS

Transcription

1 TAX WITHHOLDING AND REPORTING FOR EMPLOYEE SHARE PLANS FACT SHEET has one of the most complicated tax reporting regimes for Employee Share Plan (ESP) administration, especially when factoring in applicable U.S. rules and regulations. While countries like the U.S., UK, and Australia have two to three Employee Share Plan structures, has approximately ten, with administering the seven most common plan structures. Below is a summary of the commonly issued tax slips applicable to the plans that administers, what information is reported on them, who receives them, who typically issues them, applicable reporting deadlines, who withholds taxes and who typically remits the taxes to the applicable government agency. The summary below is not intended to be a complete list or to provide an exhaustive description of the scenarios in which a particular tax form is issued. ESPPs - Employee Share Purchase Plans remitted authority T5 RL3 Dividends and interest from sources s Electronic Electronic February 28th T3 6 Distributions paid on income fund units s Electronic Electronic March 31st T Proceeds of disposition (and deemed dispositions) and book value to enable the participant to calculate capital gains / losses on share / unit sales and some capital payments s Electronic Electronic February 28th NR4 Income paid and corresponding taxes on sourced income Non- s Electronic Electronic March 31st company contributions / applicable discounts distributed to employees as employment income or non- if income was s Electronic Electronic February 28th certainty ingenuity advantage

2 RRSPs - Registered Retirement Savings Plans RRSP Contrib. slip RSP RL2 Cash / share / unit contributions FMV of nontax sheltered withdrawals and corresponding taxes s Electronic January - February of current year: March 31st CRA: May 2nd March - December of previous year: February 28th CRA: May 2nd remitted to tax authority s Electronic Electronic February 28th T550 Application for registration of RSPs under the Income Tax Act () Electronic February 28th T3GR Group Income Tax and Information (plan level) Plan Electronic March 31st Employer contributions and corresponding taxes, and non if income was s Electronic Electronic February 28th TFSAs - Tax-Free Savings Accounts remitted Electronic File Electronic File Opening and closing market values, all contributions, withdrawals and activity within the TFSA Electronic February 28th Employer contributions and corresponding taxes (requirement to be verified by ) or non- if income was s Electronic Electronic February 28th Plan Sponsor EPSPs - EmployeeS Profit Sharing Plans remitted PS RL25 Employer contributions, dividends paid on shares, distributions paid on units, interest income, forfeitures and capital gains/losses s Hardcopy Electronic February 28th Employer contributions (requirement to be verified by Plan Sponsor) or non- if income was earned in s Electronic Electronic February 28th

3 DPSPs - Deferred Profit Sharing Plans A T3D RL2 Quebec Trust Payments from the trust s Electronic Electronic February 28th remitted authority Income Tax Plan Hardcopy Hardcopy March 31st Employer contributions (requirement to be verified by Plan Sponsor) or non- if income was earned in s Electronic Electronic February 28th EBPs - Employee Benefit Plans T3RET Quebec Trust payments from EBP trusts (@FMV) as employment income Trust Income Tax and Information remitted s Electronic Electronic February 28th Plan s Hardcopy Hardcopy March 31st DSUPs - Deferred Share Unit Plans payments under plan remitted s Electronic Electronic February 28th RSPs - Restricted Stock Plans payments under plan remitted to tax authority s Electronic Electronic February 28th

4 SOPs - Stock Option Plans / SARs remitted Each exercise s option / SAR cost (# of shares / units * FMV) and corresponding taxes s Electronic Electronic February 28th IRS Reporters - U.S. Sourced Income IRS Participants IRS 1099B 1099Div 1042S W2 Proceeds of disposition and cost basis on IRS reportable share / unit sales and some capital payments as well as corresponding taxes dividend / distribution income on IRS reportable shares / units and corresponding taxes Dividend / distribution income on IRS reportable shares / units when income is U.S. sourced company contributions / applicable discounts distributed to employees as employment income and corresponding taxes Non-U.S. domiciles without a W8 on s Electronic s Electronic February 15th January 31st remitted s Electronic March 15th U.S. s Electronic January 31st IRS Reporters - CDN Sourced Income IRS Participants IRS 1099B 1099Div W2 Proceeds of disposition and cost basis on IRS reportable share / unit sales and some capital payments as well as corresponding taxes Dividend / distribution income on IRS reportable shares / units company contributions / applicable discounts distributed to employees as employment income and corresponding taxes s Electronic s Electronic February 15th January 31st remitted U.S. s Electronic January 31st

5 DEFINITIONS CRA: Revenue Agency FMV: Fair Market Value FRK: Full Recordkeeping MRQ: Ministry of Revenue Quebec NRK: Non-Recordkeeping Supplementaries: Tax slips issued to plan About Limited (CPU) (ASX:CPU) is a global market leader in transfer agency and share registration, employee equity plans, proxy solicitation and stakeholder communications. We also specialize in corporate trust, mortgage, bankruptcy, class action, utility and tax voucher administration, and a range of other diversified financial and governance services. Founded in 1978, is renowned for its expertise in high integrity data management, high volume transaction processing and reconciliations, payments and stakeholder engagement. Many of the world s leading organizations use us to streamline and maximize the value of relationships with their investors, employees, creditors and customers. is represented in all major financial markets and has over 12,000 employees worldwide. more information, visit COMPUTERSHARE PLAN MANAGERS Sean Davis, Ontario and Western Bruno Di Genova, Central and Eastern Trust Company of. rights reserved. The information contained herein is general in nature and is not intended to provide legal or tax advice. Applicability to specific situations should be determined through consultation with your legal and/or tax advisor. CPM_TAX_WITHOLDING_EN_