Backdating, tax evasion, and the unintended consequences of Canadian tax reform

Compton, Ryan and Sandler, Daniel and Tedds, Lindsay M. (2010): Backdating, tax evasion, and the unintended consequences of Canadian tax reform. Published in: Tax Notes International , Vol. 59, No. 9 (2010): p. 671.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Employee compensation, stock options, personal income tax
• Subjects: K - Law and Economics > K3 - Other Substantive Areas of Law > K34 - Tax Law; K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J33 - Compensation Packages ; Payment Methods; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H26 - Tax Evasion and Avoidance

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