Principales Questions: (1) Would a DSU plan providing for the redemption of units in the event of the termination of the plan upon a change in control of the employer or the termination of the plan upon a change in control consistent with the provisions of section 409A of the Internal Revenue Code comply with the requirements of paragraph 6801(d) of the Income Tax Regulations? (2) If not, to which taxation years will the salary deferral arrangement rules apply? (3) Would the grandfather rule provided in 2015-0610801C6 apply to the current situation?
Position Adoptée: (1) No. (2) All amounts deferred in accordance with the plan, including dividend equivalents and all other additional amounts that accrued to, or for the benefit of the participants, will be included in the computation of income of the participants in the earliest non-statute-barred taxation year following the year in which the income should have been included based on subsection 6(11). (3) No.
Raisons: (1) The timing of payments further to the termination of the plan upon a change in control of the employer can be earlier than the time of the participant’s death, retirement or factual loss of office or employment required under paragraph 6801(d) of the Income Tax Regulations. (2) The Plan never qualified under paragraph 6801(d) of the Income Tax regulations. (3) The DSU plan does not respect the provisions of paragraph 6801(d) as it provides for the redemption of units in the event of the termination of the plan upon a change in control of the employer. Since this distribution event allows us to conclude that the Plan does not meet the requirements of paragraph 6801(d), it is our view that the grandfather rule established in document 2015-0610801C6 does not find application.
