Redemption premiums on MRPS are dividends

Luxembourg accommodates the issuance of mandatory redeemable preferred shares ("MRPS"), which are treated as debt for Luxembourg interest-deduction purposes but are shares under the Luxembourg corporate law.  CRA indicated that the premium received on redemption of MRPS is a dividend to the Canadian holder on ordinary principles (i.e., even before applying s. 90(2)).

Neal Armstrong.  Summary of 30 April 2013 Memorandum 2012-0439741I7 ("Hybrid Instruments-MRPS Debt or equity") under s. 90(1).