Willa’s WestJet Windfall

Employee and shareholder financial options to consider

The recent announcement of the pending sale of WestJet to Onex is big news and a potentially life-changing sudden money event for many WestJet employees.

WestJet doesn’t have a pension plan for its employees; instead, it opted to go with a non-registered share purchase plan. Allowing employees to participate in the growth of the company by becoming part owners, a great way to create long term shareholders and to reward their employees. Those employees that took full advantage of the share purchase plan have seen a tremendous increase in the value of their equity ownership, given the recent offer to buy by Onex. What they do next however could be even more important than their initial decision to participate in the share purchase plan.

For any WestJet employees that hold their shares in non-registered accounts, a sale will trigger a taxable capital gain.

A capital gain is the difference between the final sale and the adjusted cost base (ACB) which is the price paid for the shares. Fifty percent of this gain is going to be taxable in the year the sale takes place. Without proper tax planning, this could be a huge loss of capital, capital that was intended to stay invested until retirement.

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