Taxable Benefits Related to the Purchase of Shares or Stocks at a Discount
Taxable benefits that are related to the purchase of shares or stocks at a discount or the employee’s receipt of shares free of charge must be reported in Box 14 and Code 38 of the T4 and Boxes A and L or the RL-1 only.
Do not report a deduction in Code 39 or 41 of the T4 or a code on the RL-1 for this type of stock related benefit.
The deduction codes on the T4 that apply to stock options as well as the applicable codes on the RL-1 should only be used to report stock options that are based on an agreement between the employer and employee that allows the employee to purchase shares at a fixed price per share.
The price of these shares cannot be lower than the fair market value of the shares on the date the agreement was made.
If your stock related benefit is based on these criteria, you may be eligible to report a 50% deduction using codes 39 or 41 on the T4 and a 25% deduction in Code L-6 on the RL-1 followed by the amount.