Two taxable moments, not one
Restricted stock units are taxed at two separate points, and keeping them straight is the whole game:
- At vesting — the fair market value of the shares that vest is a taxable employment benefit, added to your T4 and taxed like salary.
- At sale — any change in value between vesting and selling is a capital gain or loss, taxed on the capital-gains basis.
The grant date itself is generally not taxable. Tax starts at vest.
The vest value becomes your cost base
Because you were already taxed on the fair market value at vesting, that same value becomes your adjusted cost base for the shares. When you later sell, only the gain above the vest value is taxed again — as a capital gain.
US-dollar RSUs and FX
Many Canadian employees hold RSUs in US companies. Each vest is converted to Canadian dollars at the Bank of Canada rate on the vesting date, and the sale is converted at the rate on the sale date. The currency movement between those dates is part of your capital gain — so even if the share price in US dollars is unchanged, you can have a gain or loss in Canadian dollars.
How ESPP and options differ
The same “already-taxed value becomes your cost base” principle extends to other equity comp, with wrinkles:
- ESPP — the discount you receive is a taxable benefit; your cost base is generally the full fair market value at purchase, not the discounted price you paid. Full ESPP guide.
- Stock options — exercising creates an employment benefit (the spread), and your cost base includes both that benefit and the exercise price. Full options guide.