Option 2: Trusts that own LTCs Supports the integrity of the prohibition on corporate ownership By not allowing for any distributions to corporate should be allowed to have of LTCs by restricting the economic benefits of LTC ownership beneficiaries, including ones where the total number of corporate beneficiaries so long as from flowing through to corporate beneficiaries. counted owners (including all shareholders of the corporate no distributions are made to those beneficiary) is below 5, this proposal would preclude corporate beneficiaries. Does not result in restructuring of existing structures, as distribution to those corporates that meet the LTC corporate beneficiaries in and of themselves do not cause the requirements but who have not elected into the LTC rules. LTC to fail the eligibility criteria, so long as no distributions are Currently such distributions are allowed. made to those beneficiaries. It will result in some trusts incurring costs in restructuring to remove corporate beneficiaries and/or tax costs (incurred due to the consequences of LTC share disposal). Requires legislative changes. Option 3: Trusts that own LTCs Allows for broader use of the LTC regime. Undermines the policy intent that LTCs should not be widely should be allowed to have held vehicles. corporate beneficiaries. Has no effect on existing or future structures. Poses a risk to the tax base by encouraging planning opportunities involving corporates. Requires legislative changes. Option 4: Trusts that own LTCs Has no effect on existing or future structures as is current The integrity of the prohibition on corporate ownership of should be allowed to have requirement. LTCs continues to be undermined. corporate beneficiaries, only if the total number of counted owners No legislative change is required. Only partly meets objective of ensuring LTCs are not able to (including all shareholders of the be widely held. corporate beneficiary) remains Partly meets objective of LTCs not being able to be widely held. below 5(status quo).
Option 2: Trusts that own LTCs should be allowed to have corporate beneficiaries so long as no distributions are made to those corporate beneficiaries. Supports the integrity of the prohibition on corporate ownership of LTCs by restricting the economic benefits of LTC ownership from flowing through to corporate beneficiaries. Does not result in restructuring of existing structures, as corporate beneficiaries in and of themselves do not cause the LTC to fail the eligibility criteria, so long as no distributions are made to those beneficiaries. By not allowing for any distributions to corporate beneficiaries, including ones where the total number of counted owners (including all shareholders of the corporate beneficiary) is below 5, this proposal would preclude distribution to those corporates that meet the LTC requirements but who have not elected into the LTC rules. Currently such distributions are allowed. It will result in some trusts incurring costs in restructuring to remove corporate beneficiaries and/or tax costs (incurred due to the consequences of LTC share disposal). Requires legislative changes. Option 3: Trusts that own LTCs should be allowed to have corporate beneficiaries. Allows for broader use of the LTC regime. Has no effect on existing or future structures. Undermines the policy intent that LTCs should not be widely held vehicles. Poses a risk to the tax base by encouraging planning opportunities involving corporates. Requires legislative changes. Option 4: Trusts that own LTCs should be allowed to have corporate beneficiaries, only if the total number of counted owners (including all shareholders of the corporate beneficiary) remains below 5(status quo). Has no effect on existing or future structures as is current requirement. No legislative change is required. Partly meets objective of LTCs not being able to be widely held. The integrity of the prohibition on corporate ownership of LTCs continues to be undermined. Only partly meets objective of ensuring LTCs are not able to be widely held.
2016-ris-archcrm-bill-11.docx