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Retaining stock options from US employer after moving to Canada and working as consultant for same company

I am curious to hear the experiences surrounding stock options from those who moved from the US to Canada and continued working for the same US employer as a contractor (either independent contractor or through some agency), thereby changing your status from an employee of that company to a contractor for that company.

I have a few specific questions regarding that:

(1) Regarding already-vested stock options, were you treated the same as if you had quit the company? In other words, were you told to either exercise your already-vested stock options within 90 days (or some other fixed period) or lose them? Or were you able to hold on to those stock options and delay exercise as long as you were working for the company as foreign contractor?

(2) Regarding stock options that were granted before you left US but were not vested, were you able to continue vesting those options while you worked as contractor in Canada?

(3) Finally, regarding “shares” (meaning those options that you already exercised while in the US), I assume you can sell them whenever you want as they were already exercised before you left US. Was there any complication regarding when/how to sell those shares after you moved to Canada?

Would appreciate any responses to these questions. I know this is more of a question for an experienced CPA with knowledge of corporate law and such, but wanted to get some initial responses based on personal experiences, so I have some sense of what to expect.

Thanks

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From my experience:
(1) I changed from US employee to Canadian (subsidy’s) employee. Any stocks granted earlier continue to vest as per the schedule. I don’t think being a contractor will work similarly due to company’s tax obligations etc.
(2) Vesting continues as per schedule, but I have to pay double taxes at the time of scheduling. US(Fed), US(State), Can(Fed) and Can(State). I have to then claim my taxes from US when filing returns.
(3) Many Canadians trade in the US stock market. Only catch is dealing in USD. You will have to notify the broker regarding your status change so that you don’t go through the tax filing hassle.

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Thanks proutray!

Hello @vijay4454,

Did you find a tax consultant who could answer these options related questions? It would be great if you could recommend someone here who can help with treatment of options (especially in case of a late stage startup), or share your insights on it.

@proutray, do you mean that we need to pay withholding tax to IRS on options vesting or exercising, and then income tax to CRA?

My brokerage deducts taxes on vesting.
Stocks granted while I was in the US still go through double taxation. I file tax returns with IRS and get my refund.
Stocks granted after I changed my status to be living in Canada are only taxed for the CRA.

P.S. I am not sure if this is only with the particular brokerage.

Hi @usa2can. I have not yet moved to Canada. I don’t have plans to move in the next couple of years. So I have not done any further research on this topic beyond what I learned from this thread.