Shopify Inc. chief executive Tobias Lutke is keeping a close watch on an NDP election pledge that could change the way stock options are taxed, despite reassurances from Tom Mulcair that technology startups wouldn’t be impacted by the new rules.
Mr. Lutke said Thursday that he wants to ensure Canada’s burgeoning startup community doesn’t get sideswiped by new taxation on stock options, described by Mr. Mulcair as a “loophole” used by the wealthiest Canadians which he has pleged to close if NDP wins power in the Oct. 19 federal election.
The co-founder of the Ottawa-based e-commerce startup said stock options were one of the crucial ways Shopify was able to attract employees when it was first getting off the ground and money was tight.
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“(Stock options were) a reason why many amazing people ended up joining Shopify, and that made a big difference for the success of the business, Mr. Lutke said.
“Will less companies succeed because (fewer) great people join early stage startups? Absolutely, and I think that’s regrettable.”
A potential clash between Mr. Mulcair and tech entrepreneurs like Mr. Lutke was quickly extinguished last week. The party leader sent a personal letter to Mr. Lutke and fellow Canadian startup founder Ryan Holmes of HootSuite saying that “early stage companies” would be excluded from his taxation plan.
Mr. Lutke said the response gave him more confidence in the NDP plan.
The NDP has also proposed to raise corporate taxes, which Mr. Lutke considers less of an issue.
“Canada has really low taxes for companies to begin with, so (taxes) going up doesn’t make a lot of difference,” he said.
“Everyone should pay their fair share,” he added.
Shopify has been growing in leaps and bounds this year after listing on the public markets in May.
On Thursday, the company announced plans to raise its profile in Waterloo, by moving into a larger office that can house up to 300 employees.
Shopify, which built its business on helping other companies launch their own web stores using Shopify software, hopes to attract talent from local universities and other tech companies.
The company already has offices in Ottawa, Montreal and Toronto as well as a small operation in Waterloo that has about 20 employees.
In Waterloo, the new office will be mostly focused on Shopify Plus, its higher-tiered service for heavy volume merchants. The space will undergo renovations over the coming months with an official opening date set for April 2016.
Mr. Lutke said he’s encouraged by the growing awareness of Canada’s young startups and the fact that politicians are discussing the future of the industry.
“Startups are not the obvious things to talk about,” he said.
“It’s much easier to talk about the manufacturing jobs that are going away, rather than the startups which would create the equivalent amount of jobs.”
Since going public, Shopify has seen its market value soar to about US$2.6 billion. Its stock began trading on the Toronto Stock Exchange on May 21 at C$35.03 and closed Thursday at $46.38, a gain of 32 per cent.
