Backdating, Tax Evasion, and the Unintended Consequences of Canadian Tax Reform

22 Pages Posted: 11 Apr 2010 Last revised: 21 Feb 2011

See all articles by Ryan A. Compton

Ryan A. Compton

University of Manitoba

Daniel Sandler

University of Western Ontario - Faculty of Law

Lindsay M. Tedds

University of Calgary - The School of Public Policy; University of Calgary - Department of Economics

Date Written: April 9, 2010

Abstract

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.

Keywords: Employee compensation, stock options, personal income tax

JEL Classification: J33, H26, K34, K42

Suggested Citation

Compton, Ryan A. and Sandler, Daniel and Tedds, Lindsay M., Backdating, Tax Evasion, and the Unintended Consequences of Canadian Tax Reform (April 9, 2010). Tax Notes International, Vol. 59, No. 9, p. 671, 2010, Available at SSRN: https://ssrn.com/abstract=1586987

Ryan A. Compton

University of Manitoba ( email )

501 Fletcher Argue Bldg
Winnipeg, Manitoba R3R3B1
Canada

HOME PAGE: http://home.cc.umanitoba.ca/~compton

Daniel Sandler

University of Western Ontario - Faculty of Law ( email )

London, Ontario N6A 3K7 N6A 3K7
Canada

Lindsay M. Tedds (Contact Author)

University of Calgary - The School of Public Policy ( email )

Calgary, Alberta
Canada

University of Calgary - Department of Economics ( email )

University Drive
Calgary, Alberta T2N 1N4
Canada

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