CRA is revoking rulings on conversions of three year bonus unit plans (RSUs) to DSUs

CRA at one point had been providing rulings accommodating the conversion of three-year bonus unit plans (under para. (k) of the salary deferral arrangement rules) into deferred share unit plans (intended to be governed by Reg. 6801(d)) (See e.g. 2005-0144541R3). CRA has now concluded that the Act does not accommodate this flexibility and has revoked or will revoke such rulings. Units that were already in the bonus plan prior to the revocation can still be converted.

Plans established under 409A of the Code permit a more flexible range of events giving rise to a distribution entitlement than is permitted under the DSU rules in Reg. 6801(d). A Canadian employee who is a member of such a plan will be required to comply with the more restrictive Canadian rules.

Edited transcripts of the answers given today at the annual CTF Roundtable are being uploaded over the next several days.

Neal Armstrong. Summary of 24 November 2015 CTF Annual Roundtable, Q. 2 under 2015 CTF Roundtable.