If you purchased security options from your employer (such as shares of a corporation or units of a mutual fund trust) between February 27, 2000 up to and including 4:00 p.m. EST on March 4, 2010 (not granted by a Canadian controlled private corporation (CPCC)), and you chose to defer the benefits of these security options, you’ll have to complete form T1212.
A security option benefit results when you buy securities through your employer at a price which is less than the fair market value (FMV) of the securities. In this case, you’ll have a taxable benefit received through your employment, which can be reduced by the amount you paid to acquire the option rights.
Form T1212 is used to keep track of your deferred security options benefits, and must be completed every year when preparing your tax return as long as you’ve an outstanding balance of deferred security option benefits (regardless if you’ve deferred any options this year or disposed of any securities that were previously deferred).
Note: If you disposed of securities in 2018 and can’t defer your security benefits any longer, you will also need to complete the Schedule 3 form (and Schedule G, if you’re a resident of Québec) to report your capital gain or loss. The Schedule 3 and Schedule G forms are combined in H&R Block’s tax software and can be found under the PENSION PLANS AND INVESTMENTS icon on the PREPARE tab. Refer to our Capital gains or losses (Schedule 3 and Schedule G) help article for information on how to complete the form.
What does it mean to defer security option benefits?
If you purchase shares through an employee security option, the taxable benefit isn’t included in your income the year the purchase was made. Instead, the taxable benefit is added as income in the year you:
- sell these shares
- become a non-resident of Canada or
- pass away
Where do I claim this?
Follow these steps in H&R Block’s 2018 tax software:
- On the PREPARE tab, click the IN THIS SECTION icon.
- In the Employment expenses box, click the Add This Topic button.
- Click the EMPLOYMENT icon. You’ll find yourself here:
- Under the EXPENSES heading, select the checkbox labelled, Statement of deferred security options benefits (T1212), then click Continue.
- When you arrive at the page for your T1212, enter your information into the tax software.