24 August 1989 Income Tax Severed Letter AC58349 - Phantom Stock Plan

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.

19(1)                                       5-8349
                                            M. Shea-DesRosiers
                                            (613) 957-8953

August 24, 1989

Dear Sirs:

Re: Phantom Stock Plan

This is in reply to your letter of July 5, 1989 wherein you request out opinion as to whether the phantom stock plan described in your letter might be considered a salary deferral arrangement.

As stated at he 1988 Canadian Tax Foundation Conference, it is the Department's current position that where, on a specified date, the value of the phantom shares on that date will be paid to the employee, the plan will be considered a salary deferral arrangement, notwithstanding that the value on the payment date may be less than the value at the time such shares were granted. Based on the Department's review of phantom stock plan, it has been noted that where the amount paid to the employee is based on the full value of the specified shares, the phantom shares are generally granted in respect of the employee's past services.

We trust the above comments will be of assistance to you.

yours truly,

for Director Financial Industries Division Rulings Directorate