True North REIT proposes a Deferred Unit Plan that gives the right to receive REIT units before retirement

The safe harbor from the salary deferral arrangement rules provided in Reg. 6801(d) for deferred share unit plans is only available for corporations and not REITs. However, much the same thing can be accomplished by issuing qualifying participants "deferred units," which essentially are options to acquire REIT units at a nil exercise price. In IT-113R4, para. 6, CRA accepts that an option can qualify for treatment under the s. 7 rules (i.e., no recognition of employment income until exercise) even if the option can be exercised without the payment of monetary consideration.

Given that a REIT Deferred Unit Plan need only comply with the s. 7 rules, it can depart from what would be permitted under a DSU. For example, the currently proposed Deferred Unit Plan of True North REIT provides that a participant can redeem 20% of his or her Deferred Units every five years.

Neal Armstrong. Summary of Circular of True North Apartment REIT under Other – Deferred Unit (or RUR) Plans.