I respect you for acknowledging that your information is out of date. As far as how it works today... In Canada, the gain from stock options is subject to jus

I respect you for acknowledging that your information is out of date. As far as how it works today... In Canada, the gain from stock options is subject to just a 50% income inclusion. So, in your example, if you get a $20000 gain from the stock options, you would only be increasing your taxable income by $10000. In other words, if your marginal tax rate is 36%, the effective tax rate of the option gain is 18%. This is the same income inclusion rate as a capital gain, but it is not considered to be a taxable gain, so you cannot use it to offset capital losses. The deferral ability you mentioned (delaying tax until you sold the stock) was eliminated in the 2010 Canadian Federal budget. (Relief was also made available for people who used this deferral option in the past, and have had a stock price decline since the deferral) Disclaimer: I am not an accountant.