Publicly-traded scale-up companies will be exempt from the federal government’s proposed tax treatment of stock options, The Logic has learned.

The 2019 federal budget proposed a new cap on the value of stock options for which individuals can receive favourable tax treatment, although it said the incentive would remain uncapped for “start-ups and rapidly growing Canadian businesses.” But the government did not explain how it would define those terms. Top tech companies—particularly publicly-traded firms with tens or hundreds of millions in revenue—had expressed concerns about whether they would qualify for the carve-out.

Innovation Minister Navdeep Bains said scale-ups will be covered by the carve-out, even if they have gone public. “Companies like Shopify, other emerging companies and companies that are scaling up in Canada would be exempted,” he confirmed in an interview with The Logic.

Bains has repeatedly talked up the need to create more innovative scale-ups in Canada. And, he acknowledged concerns raised by some in the Canadian tech sector that a higher tax on stock options could stymie the continued growth of those companies. “If you want 20 Shopifys, you’ve got to make sure … that they, for example, are part of the carve-out,” he said. “From our perspective, the stock-options [measure] is clearly focused on large, established companies, for example in the banking sector and telecommunications sector.”

Bains said Finance Minister Bill Morneau would provide details of the new measures “in the coming months.”

The Department of Finance did not answer questions about whether the exemption will apply to mature technology companies that have been publicly traded for decades like OpenText and BlackBerry, or firms headquartered in the U.S. but with significant operations in Canada like Ceridian, the human resource software company, and the e-commerce startup Faire. It also did not address earlier questions from The Logic about how the government planned to define “start-up” or “rapidly-growing Canadian business” for the purposes of the cap and whether publicly-traded companies would be included in the exemptions.

The cap does not apply to existing options.

Stock options are currently taxed at half the rate of regular income. Startups and scale-ups use them in lieu of higher salaries to attract and retain talent. Fast-growing Canadian technology companies have expressed concerns about the government’s options-limiting plan, particularly because personal income taxes are higher than in the U.S., Canada’s major competitor market for top talent.

According to the budget, the benefits of the current tax policy for stock options “disproportionately accrue to a very small number of high-income individuals,” with six per cent of claimants receiving 64 per cent of the $2.09 billion in annual deductions. The government plans to introduce a $200,000 annual limit for that deduction for employees of “large, long-established, mature firms.”

The Liberal platform in the 2015 federal election included a $100,000 options cap, but following opposition from the tech sector, the measure was left out of Morneau’s first budget the year after.

Shopify CEO Tobi Lütke was among the plan’s opponents, telling The Canadian Press that such rules would have made it harder to build his company, and that senior ministers had promised in private meetings to grandfather existing options grants.