CRA rules that a corporation can issue DSUs which indirectly track units through the use of tracking shares

The safe harbor in Reg. 6801(d) for deferred share unit plans is restricted to DSUs issued by a corporate employer or related corporation which are based on the fair market value of shares of a corporation in the group.

Employees of a public corporation managed a publicly listed LP of which a corporate subsidiary was the GP. CRA ruled that the corporation could get around the share restriction by having a Newco subsidiary issue a few tracking shares (i.e., shares which were redeemable and retractable for the trading price of the LP units) and then issuing DSUs to the managing employees which, in turn, tracked the tracking shares.

Neal Armstrong. Summary of 2014 Ruling 2012-0457101R3 under Reg. 6801(d).