Option 1: A taxpayer should be Addresses the concern that the current rule over-taxes the Requires legislative changes. able to opt to treat cash and dividend (as a result of the gross up requirement) in these Dividend rules: RWT on concurrent cash and non-cash dividends paid concurrently circumstances. dividends as a single dividend, when the cash dividend is sufficient to Reduces the compliance and administrative costs associated with Should a company paying cash cover the RWT obligations for the refund of the over-taxation. and a non-cash dividends both dividends. concurrently, be able to opt to Does not affect the RWT payment, as the RWT due on both treat the two dividends as a dividends is covered in the cash dividend. single dividend, for the purposes of the RWT obligations when the cash dividend is sufficient to cover the RWT due? Option 2: A taxpayer should not No legislative change is required. Does not address the concern that the current rule over-taxes be able to opt to treat cash and the non-cash dividend (as a result of the gross up non-cash dividends paid requirement) which may then require a refund if credit cannot concurrently as a single dividend, be used against the tax liability on other income. with the two dividends remaining separate for the purposes of the RWT obligations (status quo). Theme Rules which restrict commercial practice
Dividend rules: RWT on concurrent cash and non-cash dividends Should a company paying cash and a non-cash dividends concurrently, be able to opt to treat the two dividends as a single dividend, for the purposes of the RWT obligations when the cash dividend is sufficient to cover the RWT due? Option 1: A taxpayer should be able to opt to treat cash and dividends paid concurrently as a single dividend, when the cash dividend is sufficient to cover the RWT obligations for both dividends. Addresses the concern that the current rule over-taxes the dividend (as a result of the gross up requirement) in these circumstances. Reduces the compliance and administrative costs associated with the refund of the over-taxation. Does not affect the RWT payment, as the RWT due on both dividends is covered in the cash dividend. Requires legislative changes. Option 2: A taxpayer should not be able to opt to treat cash and non-cash dividends paid concurrently as a single dividend, with the two dividends remaining separate for the purposes of the RWT obligations (status quo). No legislative change is required. Does not address the concern that the current rule over-taxes the non-cash dividend (as a result of the gross up requirement) which may then require a refund if credit cannot be used against the tax liability on other income. Theme Rules which restrict commercial practice
2016-ris-archcrm-bill-11.docx