Backdating, Tax Evasion, and the Unintended Consequences of Canadian Tax Reform
Ryan A. Compton
University of Manitoba
University of Western Ontario - Faculty of Law
Lindsay M. Tedds
University of Victoria
April 9, 2010
Tax Notes International, Vol. 59, No. 9, p. 671, 2010
In 1984 and 2000, significant changes were made to the tax treatment of employee stock options in Canada. Although designed to increase the use of stock options as a compensation vehicle (1984) and decease the loss of knowledge workers (2000), we argue that these tax changes were largely ineffective and perhaps unneeded. Further we demonstrate the negative unintended consequences of these actions, specifically that they reward the backdating of employee stock options and promote tax evasion, and discuss the policy implications of these unintended consequences.
Number of Pages in PDF File: 22
Keywords: Employee compensation, stock options, personal income tax
JEL Classification: J33, H26, K34, K42Accepted Paper Series
Date posted: April 11, 2010 ; Last revised: February 21, 2011
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