The Canadian securitization markets have largely settled on a preferred structure for each type of securitized instrument

The most commonly-used lease securitization structure in recent years entails the leased equipment being dropped down to an LP under s. 97(2), with that LP issuing asset-backed notes, either directly to investors or to a conduit trust (that in turn issues commercial paper to investors) - and with that LP using such proceeds to repay a note issued by it on the drop down or returning partnership capital to the lease originator. Because of potential benefits of the LP being a principal business partnership and since the principal leasing business requirement must be met throughout each taxation year “it is common to transfer a few leased pieces of equipment to the [LP] at the time of its formation.” However, principal business partnership status may be in question if the lease originator retains some leased equipment and this is considered to be a business separate from its leasing business carried on “through” the LP.

Where mortgages are securitized by selling undivided co-ownership interests in the pool, the Reg. 7000(2)(b) interest accrual rules typically apply because the co-ownership interests give rise at various times to non-pro-rata entitlements to the mortgage interest that is collected. Although technical difficulties can arise respecting whether these interest accrual rules can dovetail with the net interest income being reduced by servicing fees:

A practical approach is for the certificate holder to report the net amount received and compute the prescribed-debt obligation accrual on the basis of the net amounts. The CRA agrees with this position.

“No significant assessments have come to light in connection with the treatment of the servicing...since...Canada Trustco” (which found that the sale of mortgages on a fully-serviced basis was a single financial supply).

There is a potential conflict in structuring a trade receivables securitization between providing for a true sale and permitting bad debts to be claimed for GST purposes by the vendor.

Neal Armstrong. Summaries of Sabrina Wong and Sania Ilahi, Tax Implications of Asset Securitizations, 2015 CTF Conference Report under Reg. 1100(16), Reg. 1100(2.2)(f), Reg. 7000(2)(b), s. 12(9.1), ETA s. 123(1) – financial service, s. 9 – computation of profit, ETA s. 231(1).