As part of my compensation, my employer awards restricted stock units (RSUs) of an American company at various times in the year. These are held in an American account.
Each time the RSUs vest, the employer sells a certain number of shares to cover withholding tax.
I think I should report this on T1135 in the following manner, but I'd like to confirm whether this is correct.
- Report under category 2, 1. Report under category 2, "Shares of non-resident corporations (other than foreign affiliates)"
- "Maximum cost amount during the year": Set to zero, as I have no cost/ACB due to not having purchased these shares myself.
- "Gross income": report the gross Canadian-dollar value at the time the RSUs vest. Example: On February 2018 I get 10 shares vesting at a price of $9CAD/share, and 4 are sold for tax purposes. On September 2018 I get 5 shares at a price of $8CAD/share, and 2 are sold for withholding tax. Report 9*10 + 8*5 = $130
- "Gain (loss) on disposition": report capital gain or loss, if I had sold any shares during the year. But for this reporting, should I count the ACB as zero, or should I calculate the ACB as if I had purchased the shares at fair market value on the vesting dates?
Also, if I had received RSUs in the previous year but my total foreign property ownership was under $100,000 in that year, do I need to report these RSUs somehow on T1135?
** EDIT: see my additional comment below, which contains a revised answer from CRA. This answer is not totally correct **
I called CRA. The agent I spoke with confirmed that these items are correct:
- use category 2
- cost amount is zero
- report RSU amounts under gross income
Regarding previous year RSUs under $100,000: the agent said that this did not need to be reported in T1135 for 2019 as it was not part of my income for 2018.
Regarding gain/loss on disposition: Documentation from my company indicates that the ACB should be calculated using the fair market value and number of shares on each vesting date. That makes sense to me since the gross amount of the RSUs were already reported as income in box 14 of my T4, and withholding taxes were already deducted by selling shares to cover the taxes (box 22). If ACB was taken to be zero, the disposition would basically be double-taxed.
Hello !
Came across your post while being confused on the same topic.
Thank you so much for sharing the information you received from CRA.
I have a quick follow up question, and I would appreciate any help possible! Thanks in advance!
Take an example, on vesting date, you receive 100 shares with fair market value of $10 per share. Your company withholds and sell 40 shares on your behalf to cover taxes. Your paystub will see a $1000 added gross income, and $400 taxes withheld.
So you receive 60 shares in your brokerage account.
To calculate ACB, which of the following calculation is performed:
1. Buy 100 shares at $10, Sell 40 shares at $10
OR
2. Buy of 40 shares at $10
(Note that scenario 1 and 2 will give different new ACB value based on your previous ACB before the vesting date).
Which is correct in your opinion ?
Would appreciate any help possible.
Thanks again!
Small edit on my previous post. Scenario 2 should say:
Buy 60 shares at $10.
Sorry for confusion
I have the exact same question. It is compounded by the fact that the vesting price and the sale price of the RSUs are usually slightly different - ie there appears to be a slight gain or loss on the sale to cover taxes after RSUs vest.
I think this issue comes down to two questions:
bk_bookkeeping-s
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