Backdating option grants
The tax sheltering might still be useful but only in certain cases.
If you are in a high tax bracket (ie 40% ) and will be contributing a significant sum of money – let’s say k.
I don’t know if it’s worthwhile opening resps for the other 2 depending on other factors discussed.
The 15 year old is the only one who will have a clear benefit from an RESP from the information given.
The rules are as follows: RESPs for beneficiaries aged 16 and 17 will be eligible for RESP grants only if at least one of the following conditions is met: From the comment it appears that all the previous resp contributions were withdrawn which makes this child ineligible for any grants.
My previous comment about tax sheltering for the 18 year old are still valid for this child.
With the continued increase in executive compensation and resultant increase in pay disparity between those executives and the average worker, this issue is once again coming to the forefront of the public policy debate.
Over the years, lawmakers have tweaked the tax code to limit disfavored forms of executive compensation, while regulators have increased the amount of disclosure companies must make. Barbara Lee (D-Calif.) has introduced the Income Equity Act of 2011 (H. 382), which would amend the Internal Revenue Code to prohibit deductions for excessive compensation for any full-time employee; compensation is defined as “excessive” if it exceeds either 0,000 or 25 times the compensation of the lowest-paid employee, whichever is larger.
There are special rules for 16 and 17 year olds with respect to the government grants which mean that this child won’t qualify.
This paper will review the effectiveness of that provision in achieving its goals, and provide information on how much revenue it has raised or lost due to deductions for executive compensation. Companies have found it easy to get around the law. And it seems to have encouraged the options industry.
With respect to reducing excessive, non-performance-based compensation, many consider Section 162(m) a failure, including Christopher Cox, the then-chairman of the Securities and Exchange Commission, who went so far as to suggest it belonged “in the museum of unintended consequences.” Sen. These sophisticated folks are working with Swiss-watch-like devices to game this Swiss-cheese-like rule.
This benefit is pretty debatable – all it takes is one good summer job and the tax benefit mostly disappears.
I’m not sure that I would bother with an resp for the 18 year old especially if the money is going to be used in the next year or two.