Why did my option exercise get taxed in two countries?
Because the benefit is not treated as arising only on the day you exercised. Both countries look back to the period the option was earned, usually from grant to vest, and each claims the portion of the benefit that relates to work performed on its own soil. If you worked in both places during that window, both have a claim to a slice. The gain is one amount; the split is a question of where you were working while it accrued. Relief for the overlap comes through a foreign tax credit claim, which is a separate exercise and depends on each country accepting the other's share.
Is the taxable amount the share price on exercise day?
The employment benefit is generally measured by the difference between what you paid under the option and what the shares were worth when you acquired them, not by what you later sold them for. Anything that happens to the share price after that day belongs to a different computation, usually a capital gain or loss, and it is sourced on different principles. Keeping those two amounts apart is the first thing to do when the paperwork arrives, because payroll will report one of them and your broker will report the other, and the two statements are not describing the same event.
My employer only withheld in one country, do I still owe elsewhere?
Often, yes. Payroll withholding follows where the employer runs its payroll, and it is rarely adjusted for the months you spent working somewhere else during the earning period. So withholding in one country is not evidence that the other has no claim; it is evidence of where the employer's payroll sat on the day. The usual result is a balance owing in one place while an over-payment sits in the other, and both returns have to be filed before either resolves. Do not wait for the two to net themselves out, because they do not.
Does leaving the country before vesting cancel the benefit?
Leaving does not usually cancel it. If the option relates to work performed in a country, that country generally keeps its claim to the part of the benefit earned there, even though you exercised after you left and hold no other connection to it. What changes is the filing route: you are likely to be making a non-resident filing rather than a resident one, and the amount reported is the sourced slice rather than the whole benefit. The other complication is that a former employer may still report the whole amount, so the return has to explain the split rather than simply copy the slip.
What records do I need to work out the split?
A month-by-month record of where you were working across the earning period, the grant and vesting documents for each tranche, and the exercise confirmation. The plan document matters more than people expect: it tells you when each tranche was earned, and the earning period is what the split is measured across. Reconstructing this afterwards from memory is where these files go wrong, because the boundary dates fall in the middle of a year and nobody remembers which side of a date a trip landed on. Passport entries, calendars and expense claims are the usual evidence.
Can I claim credit in one country for tax paid in the other?
Usually, but only for the part each country accepts as belonging to the other. A credit claim works by matching the same income, taxed in the same period, and equity is where that matching breaks down: one country may tax when the option is exercised while the other taxed at an earlier or later point in the plan's life. When the years do not line up, the credit has nowhere to land in the year you claim it. The fix is to align the reporting positions in both returns first, then claim, rather than filing each return on its own logic and discovering the mismatch afterwards.
Do I get credit for all of the foreign tax I paid?
Only up to your own country's tax on that same income, and only for tax you were legally obliged to pay. Two consequences follow. Living somewhere that taxes you more heavily than your residence country does leaves an excess that becomes a carryover rather than a refund. And withholding suffered above the treaty rate is not creditable — the route back to that money is a refund claim in the country that took it. See claiming the credit.
How much foreign income is tax-free in Canada?
None of it is tax-free for being foreign. A Canadian resident is taxed on worldwide income, so foreign salary, interest, dividends, rent and gains all go on the return, converted to Canadian dollars. What genuinely reduces the bill is the basic personal amount, the credit for foreign tax already paid, and any treaty article that exempts a specific type of income. The reporting thresholds people have in mind — the foreign property statement, for one — govern reporting, not exemption. See the foreign tax credit.
