Expat Tax Tip #17 – How Stock Options & RSUs Are Taxed When You Move Abroad

Equity compensation is one of the trickiest parts of expat life. When you’re granted stock options or RSUs (restricted stock units), the tax office may treat them differently depending on where you were living when they vested or exercised.

• Australia (ATO): Employee share schemes (ESS) are taxable when options or RSUs vest, even if granted overseas. If you’ve moved countries, Australia may tax the portion of benefit that relates to your Australian residency. ATO – Employee Share Schemes
• Canada (CRA): RSUs are taxable as employment income when they vest. Stock options may get a deduction if conditions are met, but moving abroad complicates allocation. CRA – Stock Options
• U.S. (IRS): U.S. persons must report stock options/RSUs regardless of where they work. Often, income is sourced based on where you performed the services leading to the award. IRS – Stock Options

Want a step-by-step breakdown of residency rules for equity income? See my Australia Expat Tax Basics course and Canada Expat Tax Basics course.

Tip: Keep grant letters, vesting schedules, and payslips. Tax authorities may want proof of where you were resident when each tranche vested.

Please refer to this page to see all my other expat tax tips.