CRA indicates that it does not have rigid guidelines as to what is “acceptable security”

CRA recently amended its Information Circular on its collection policies (IC98-1R8, dated 24 May 2022, replacing IC98-1R7) by inter alia adding the following passage on what is “acceptable security”:

Some types of security we may accept include bank letters of guarantee, standby letters of credit, or mortgages. Bank letters of guarantee or standby letters of credit should be provided by a Schedule I or Schedule II Canadian financial institution as defined in the Bank Act. Other forms of security can be accepted in certain circumstances. Acceptability of other forms of security is determined on a case by case basis, subject to the Minister’s discretion to accept security under subsection 220(4) of the Income Tax Act.

Acceptable security must be liquid (easily convertible to cash), equivalent or near equivalent to cash, and realizable on demand without defense or claim from third parties. …

When asked about what security CRA would accept under s. 159(5) (which provides that the tax payable by a deceased individual respecting certain income and gains under s. 70(2), 70(5) or 70(5.2)) may be paid in 10 annual instalments if the executor so elects and furnishes the Minister with security “acceptable to the Minister”), CRA referred to the above passage, and then added that such guidelines are not meant to be exhaustive and that executors will have the opportunity to discuss arrangements or security as part of the process for the election.

Neal Armstrong. Summary of 15 June 2022 STEP Roundtable, Q.4 under s. 159(5).