Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Revenue Canada Taxation Head Office
XXX
Peter K. Noack (613) 957-8953
March 29, 1988
Dear Sirs:
We apologize for the delay in replying to your application for an advance income tax ruling in your letter of September 10, 1987 on a question arising from the operation of a plan which provides for payments to employees based solely on the appreciation (if any) of the value of units (shares) awarded from the date the units are awarded to the time of their redemption. This type of plan, which we refer to as a stock (unit) appreciation plan, provides that only the appreciation and not the base amount is to be paid to the employee.
As stated in paragraph 6 of Information Circular 70-6R, rulings will be given only in respect of proposed transactions. Since the plan has been in operation since 1979, we suggest that you consult with our Toronto District Office to determine the tax consequences of certain transactions under the provisions of the plan.
Nevertheless, in our opinion, a (unit) stock appreciation plan will generally not be a "salary deferral arrangement" as defined in subsection 248(1) of the Income Tax Act.
The above comment is an expression of opinion only and is not binding on the Department. Your deposit will be returned under separate cover.
Yours truly, for Director Financial Industries Division Rulings Directorate
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© His Majesty the King in Right of Canada, 1988
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© Sa Majesté le Roi du Chef du Canada, 1988
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