CRA announces that it is grandfathering existing RSUs that are convertible into DSUs even though no ruling was obtained

CRA announced on November 24 at the annual CTF Conference that previously-granted rulings (e.g. 2005-0144541R3) respecting plans which permitted the conversion of three-year bonus units, a.k.a. RSUs (to be exercised within the three calendar years following issuance as per para. (k) of the salary deferral arrangement definition) into deferred share units (governed by Reg. 6801(d)) are being revoked. This announcement referred only to the grandfathering of units which were in ruled-upon plans. In its subsequent written response, CRA stated, respecting “3-year bonus plans and DSU plans that relied on the positions reflected in these published rulings” but for which no ruling was sought, that:

The CRA will continue to apply the positions in [the] published rulings to any units credited on or before November 24, 2015 (including units with unexercised conversion rights on that date), as well as to additional units credited at any time in respect of those units, for example, dividend equivalents and proportional adjustments due to stock splits or corporate reorganizations.

When the above text is read in light of the wording of CRA’s previous oral announcement, it is clear that RSUs that were issued on or before November 24, 2015 under the sort of plan that CRA previously was willing to rule on can be converted into DSUs within the three-year para. (k) period.

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