Option 2: The entry tax formula should not be Not recommended. Does not meet objective. Overall efficiency: amended to change the tax rate that applies to any Does not meet objective, as Fairness/neutrality: income calculated by the adjustment (status quo). does not address unfairness in current over/under taxation depending on applicable personal tax rates. Does not meet objective. No Efficiency in costs: impact on compliance costs but may be enforcement costs. Debt remission in the LTC context Options to address the concern that the interaction of the financial arrangement rules and LTC rules results in unintended debt remission income for creditor-shareholders, are listed below: Options: Recommendations Analysis against objectives Option 1: Debt remission income should not arise Recommended. Meets objective. Overall efficiency: for the shareholder-creditor when the debt is Meets objective. Fairness/neutrality: forgiven. No impact. Efficiency in costs: Option 2: Debt remission income should arise for Not recommended Does not meet objective, as it Overall efficiency: the shareholder-creditor when the debt is forgiven, may remove one distortion but it is inconsistent but they should get a bad debt deduction to offset with the general treatment of capital losses. the income. May not meet objective. Fairness/neutrality: No impact. Efficiency in Option 3: Debt remission income should arise for Not recommended No effect. Overall efficiency: the shareholder-creditor when the debt is forgiven, Does not meet objective. Fairness/neutrality: and they should not get a bad debt deduction to No impact. Efficiency in costs: offset the income (status quo). QC status Options for what should be done with remaining grand-parented QCs are listed below: Options: Recommendations Analysis against objectives Option 1: Repeal the QC regime. Not recommended. Meets objective by limiting Overall efficiency: the number of available structures, but forces for current QCs. Partly meets objective. Fairness/neutrality: Does not meet objective as Efficiency in costs: raises costs for current QCs which must convert. Option 2: Maintain grand-parenting but allow Not recommended. Does not meet objective, as Overall efficiency: remaining QCs to continue (status quo). allows any tax advantage to be traded. Does not meet objective, as Fairness/neutrality: allows QCs to maintain any tax advantage. No impact. Efficiency in
Option 2: The entry tax formula should not be amended to change the tax rate that applies to any income calculated by the adjustment (status quo). Not recommended. Overall efficiency: Does not meet objective. Fairness/neutrality: Does not meet objective, as does not address unfairness in current over/under taxation depending on applicable personal tax rates. Efficiency in costs: Does not meet objective. No impact on compliance costs but may be enforcement costs. Debt remission in the LTC context Options to address the concern that the interaction of the financial arrangement rules and LTC rules results in unintended debt remission income for creditor-shareholders, are listed below: Options: Recommendations Analysis against objectives Option 1: Debt remission income should not arise for the shareholder-creditor when the debt is forgiven. Recommended. Overall efficiency: Meets objective. Fairness/neutrality: Meets objective. Efficiency in costs: No impact. Option 2: Debt remission income should arise for the shareholder-creditor when the debt is forgiven, but they should get a bad debt deduction to offset the income. Not recommended Overall efficiency: Does not meet objective, as it may remove one distortion but it is inconsistent with the general treatment of capital losses. Fairness/neutrality: May not meet objective. Efficiency in No impact. Option 3: Debt remission income should arise for the shareholder-creditor when the debt is forgiven, and they should not get a bad debt deduction to offset the income (status quo). Not recommended Overall efficiency: No effect. Fairness/neutrality: Does not meet objective. Efficiency in costs: No impact. QC status Options for what should be done with remaining grand-parented QCs are listed below: Options: Recommendations Analysis against objectives Option 1: Repeal the QC regime. Not recommended. Overall efficiency: Meets objective by limiting the number of available structures, but forces for current QCs. Fairness/neutrality: Partly meets objective. Efficiency in costs: Does not meet objective as raises costs for current QCs which must convert. Option 2: Maintain grand-parenting but allow remaining QCs to continue (status quo). Not recommended. Overall efficiency: Does not meet objective, as allows any tax advantage to be traded. Fairness/neutrality: Does not meet objective, as allows QCs to maintain any tax advantage. Efficiency in No impact.
2016-ris-archcrm-bill-11.docx