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Jenna assists employers in drafting, implementing, and administering qualified and non-qualified retirement and welfare benefit plans. She also assists clients in matters related to corporate transactions including conducting due diligence and reviewing employee benefits provisions in merger and acquisition documents. Jenna also assists our non-U.S. clients and their local counsel with cross border equity and incentive compensation arrangements.
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Canadian companies that award stock options to their employees, non‑employee directors and/or other service providers often inquire as to whether they should offer Incentive Stock Options (“ISOs”) to any such individuals who are U.S. taxpayers. Below is a discussion of some of the tax considerations in awarding ISOs and the main requirements that must be met for an option to qualify as an ISO. Please note, this blog post provides only a high‑level summary of the tax treatment of options as well as some of the notable requirements for an option to qualify as an ISO. This article does not purport to cover every nuance or situation. As such, you should consult with...
For an employee who is a U.S. taxpayer, both the employer and the employee are liable for a portion of Social Security taxes and Medicare taxes (collectively referred to as “FICA” taxes) on the employee’s compensation. Employers are liable for withholding and remitting both the employer and the employee portions of FICA taxes, which typically occurs at the time the compensation is received by the employee, which his known as the “General Timing Rule.” However, when dealing with awards of nonqualified deferred compensation (“NQDC”) to U.S. taxpayers, a Special Timing Rule (outlined in Treas. Reg. §31.3121(v)(2)-1) may apply. Under the Special Timing Rule, FICA taxes are owed when the employee becomes vested in...
Imagine a Canadian company adopts a deferred share unit plan (DSU Plan) for its directors. At the time the plan is adopted, the company does not have the plan reviewed by U.S. counsel, because none of their directors reside in the U.S. It is not until several years later that the company learns that one of its directors, despite living in Canada, has dual citizenship with the U.S. Because the typical form of Canadian DSU Plan will not comply with U.S. tax laws governing deferred compensation, particularly U.S. Internal Revenue Code Section 409A (Section 409A), the company has quite a mess on its hands. You can read our prior articles on common payment timing issues...
A Canadian company adopting a deferred share unit plan (DSU plan) for its directors must consider U.S. tax implications for U.S. taxpayers. It is important to remember that U.S. citizens and U.S. residents for tax purposes (including green card holders) are taxed on worldwide income, regardless of where they reside. As such, participation by a U.S. director, including an expat or holder of dual citizenship, could result in significant adverse tax consequences under Section 409A of the Internal Revenue Code, as a typical Canadian DSU plan often runs afoul of Section 409A. In a prior article, DSU Plans Require Careful Review to Avoid Adverse U.S. Tax Treatment, common payment timing violations of U.S....
