Ruling that s. 7(3)(b) would not apply to an arrangement under which bonuses are paid by Y Co (a subsidiry of X Co, which is a public corportion) no later than the end of the third calendar year after the particular year of service (the "Deferral Period") through the transfer to the employee of shares of X Co (whose number, before taking into account a notional dividend reinvestment feature, is specified at the time of the grant of the bonus), given that the shares are purchased at the time of payment through an independent broker. CRA stated:
Section 7 is not applicable in the case of Y Co. as the corporation is not agreeing to issue or sell its own shares or shares of its parent company, X Co. Instead, an independent broker will purchase the shares of X Co. on the stock exchange on behalf of the employees at the end of the Deferral Period. At the same time Y Co. will pay the broker the purchase price of the shares.
