See Also
Martin v. The King, 2024 TCC 153
The taxpayers (two baseball players), who performed 40% of their duties in Canada rather than the US, agreed with the Toronto Blue Jays (the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 115 - Subsection 115(1) - Paragraph 115(1)(a) - Subparagraph 115(1)(a)(i) | total income of athletes was apportioned to Canada and the US before applying the domestic income-computation rules to their Canadian-source income | 935 |
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) - Subparagraph 6(1)(a)(ii) | s. 6(1)(a)(ii) exclusion applied only after the computation of the non-resident taxpayers’ Canadian-source income | 531 |
| Tax Topics - Income Tax Act - Section 207.5 - Subsection 207.5(1) - Refundable Tax | overview of RCA rules | 222 |
| Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) | RCA contributions would be employment income under ss. 5(1) or 6(1)(b) absent the s. 6(1)(a)(ii) exclusion | 393 |
| Tax Topics - Treaties - Income Tax Conventions - Article 15 | US baseball players were taxable only on their income generated in playing in Canada | 139 |
The Queen v. V&R Enterprises Ltd., 79 DTC 5399, [1979] CTC 465 (FCTD)
In finding (in the context of what now are ss.18(1)(a) and 78(3)) that accrued remuneration was not a "bonus" Grant D.J. stated (p. 5400):
"A...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Timing | valid year-end accrual of remuneration | 92 |
Administrative Policy
2021 Ruling 2021-0887611R3 - Defined Contribution SERP
Proposed transaction
Employees of the Employer will be members of a new defined benefit registered pension plan (the “New RPP”) that replaces...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(a) - Subparagraph 56(1)(a)(i) | only income inclusion to employees under SERP is pursuant to S. 56(1)(a)(i) | 175 |
7 March 2022 External T.I. 2021-0895571E5 - Clarification of Comments in 2020-086483
The correspondent noted the position in 2020-0864831I7 that full-value restricted share units (“RSUs”) granted early in the calendar taxation...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Salary Deferral Arrangement - Paragraph (k) | 3 years may start counting from before the grant year/ unfavourable counting where employer has non-calendar year | 330 |
3 November 2023 APFF Financial Strategies and Instruments Roundtable Q. 6, 2023-0994241C6 F - Consequences of Transfer of DSUs to a corporation
An employee transferred the individual’s rights under a deferred share unit plan described in Reg. 6801(d) (a "DSU Plan") to the employee’s...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 85 - Subsection 85(1.1) | DSU rights are not eligible property and not capital property | 62 |
| Tax Topics - Income Tax Act - Section 54 - Capital Property | deferred share units were not capital property | 59 |
2021 Ruling 2020-0858321R3 - Defined Contribution SERP
Background
The employer currently has two supplementary executive retirement plans (being unfunded plans) for the Company’s CEO and for its VPs,...
27 October 2020 CTF Roundtable Q. 8, 2020-0861061C6 - SDA and Formula-Based Plans
CRA reiterated its statements in 2020-0850281I7 (see also 2020-0841961I7) that it will no longer consider any ruling requests pertaining to...
10 July 2020 Internal T.I. 2020-0841961I7 - Salary Deferral Arrangements
This was a companion memo to 2020-0850281I7 and was issued to clarify that prior statements did not indicate “that solely forward-looking or...
10 July 2020 Internal T.I. 2020-0850281I7 - Formula-based incentive plan
The Directorate was asked to rule that a received a request to rule that a performance bonus plan would not be a salary deferral arrangement...
2019 Ruling 2019-0817751R3 - SERP and Group RRSP
Background
The Employees and Executive Employees of Employerco (a Canadian public corporation) may participate in the Company Group RRSP under...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(a) - Subparagraph 56(1)(a)(i) | SERP payouts (including as lump sum) included under s. 56(1)(a)(i) | 199 |
8 October 2010 Roundtable, 2010-0373471C6 F - Actions fictives
As consideration for bringing new employees to a Canadian corporation (“Opco”), Serviceco is issued phantom shares of Opco which generate cash...
14 May 2019 External T.I. 2017-0737571E5 - SAR plan with dividend equivalents
The share appreciation rights (SAR) plan of an employer corporation provides for dividend equivalents on SAR units that are satisfied by way of...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(14) | dividend equivalent clause is not severable from balance of SAR plan | 162 |
11 January 2019 External T.I. 2018-0740741E5 - Taxation of supplemental retirement plans
Supplemental Plan
In addition to a defined contribution registered pension plan (“RPP”) under which the employer contributes a fixed...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(14) - Paragraph 6(14)(a) | additional benefit features of supplemental pension plan treated as SDAs separate from qualifying base component of plan | 283 |
2015 Ruling 2014-0546131R3 F - SAR-type Plan
Corporation 1, which is wholly-owned by Parentco (a société anonyme, i.e., SA or public limited company), established two phantom stock plans...
14 March 2017 External T.I. 2016-0627311E5 F - Deduction of contribution to an IPP or RCA
Not knowing of the existence of an IPP respecting the same employee, the RCA actuary did not take into account the amount of contributions (based...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(q) | non-deductibility if supplementary benefits do not merely proportionately top-up IPP benefits | 85 |
2013 Ruling 2012-0435221R3 - CCPC SAR Plan
underline;">: Current Plan. Outside board members and officers of a of a Canadian-controlled private corporation (the "Company") hold "SAR Units"...
27 June 2012 External T.I. 2012-0440721E5 F - Compte de gestion de santé
2011-0426571C6 indicated that “the allocation of a future bonus to a HCSA [health care spending account] should be taxed as employment income...
23 April 2009 External T.I. 2009-0306371E5 - Determination of SERP benefits
Where a specific supplemental employee retirement plan provides benefits that are not the same as those provided under registered pension plans,...
6 January 2009 External T.I. 2008-0289341E5 F - EET - Règles transitoires
After quoting the transitional rule for the introduction of the salary deferral arrangement rules, generally effective July 1, 1986 except...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(11) | recognition under s. 6(11) of previously-unrecognized portion of deferred amount | 63 |
17 October 2008 Internal T.I. 2007-0254201I7 F - Entente d'échelonnement du traitement
An arrangement styled as a retirement compensation arrangement was in fact a salary deferral arrangement (which, under para. (k) of the RCA...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(11) | s. 6(11) deems deferred amount to be received in a year in which it has not been taxed | 111 |
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(12) | no trust created since no transfer from employer’s patrimony | 135 |
4 January 2006 Internal T.I. 2005-0115801I7 F - Convention de retraite
A closely-held corporation that was dividending out all the profits of its business also established a purported retirement compensation...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Retirement Compensation Arrangement | arrangement was not an RCA because the benefits were not reasonable | 110 |
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | contributions to purported RCA that provided excessive benefits to employee/ultimate shareholders were included in the direct shareholders’ income under s. 56(2) | 122 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(r) | excessive benefits would have resulted in denial under ss. 18(1)(o.2) and 20(1)(r) had the arrangement qualified as an RCA | 206 |
| Tax Topics - Income Tax Act - Section 67 | Petro-Canada applied re determining reasonableness | 264 |
12 April 2005 External T.I. 2005-0121251E5 F - Temps supplémentaire accumulé
Some employees of an employer accumulate overtime in a time bank with the intention of eventually accelerating their retirement or cashing in the...
2 February 2005 External T.I. 2004-0104671E5 F - Convention de retraite - Fonds mis de côté
In a general response to a query as to whether a special reserve fund that an employer creates by depositing money with a broker to provide for...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Retirement Compensation Arrangement | no requirement that payment to the other be in trust | 170 |
24 January 2005 External T.I. 2004-0099471E5 F - Convention de retraite pour un actionnaire-employé
After noting that contributions by a corporation to an RCA would not be deductible in computing its income where the contributions related to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(r) | no deduction regarding pre-incorporation services, and longstanding CRA position re shareholder-manager compensation | 129 |
| Tax Topics - Income Tax Act - Section 67 | 81 Roundtable position on shareholder-manager compensation also applies to RCA contributions | 109 |
| Tax Topics - Income Tax Act - Section 56 - Subsection 56(1) - Paragraph 56(1)(x) | Part XI.3 tax and s. 56(1)(x) income inclusion apply even where RCA contribution is partially or fully non-deductible | 146 |
19 October 2004 External T.I. 2004-0085561E5 F - Régime de droit à la plus-value des actions
Under a phantom share arrangement, the phantom shares will have a zero value at the time they are granted to employees, who will be entitled to...
2004 Ruling 2004-0056921R3 - stock options; conversion of plans
Ruling that the right of an executive to sell shares of a private company (CCPC) employer acquired by him on exercise of employee stock options to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(3) - Paragraph 7(3)(a) | 68 | |
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(3) - Paragraph 7(3)(a) | 115 |
24 May 2002 Internal T.I. 2002-0130667 F - REGIME PRESTATION EMPLOYES
The Directorate provided a review of the transitional rules for grandfathering of plans which were employee benefit plans before February 26, 1986...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(g) | amounts received by retiring employee under EBP even if elected not to receive | 153 |
| Tax Topics - General Concepts - Payment & Receipt | amounts “received” under EBP if unrestricted right to receive | 133 |
May 1998 Advanced Life Underwriting Round Table, Q. 2, No. 9807000
The tax referred to in the postponement-of-tax purpose test does not include refundable RCA tax.
In general, a funded and unregistered pension...
17 October 1997 Ruling 97110
It was proposed that an executive participate in a non-funded supplementary retirement arrangement under which, if he retired after 12 years of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(3) - Paragraph 6(3)(e) | 79 |
30 November 1996 Ruling 9719003 - DIVIDEND EQUIVALENT, SDA
Options received by employees on the merger of two U.S. corporations are amended, following the merger, to provide that they will be paid Dividend...
14 September 1994 External T.I. 9422835 - SAR, SDA ELECTION BONUS
The SDA rules could apply to a stock appreciation rights plan if a beneficiary under the arrangement chooses to defer receipt of an amount payable...
19 April 1991 T.I. (Tax Window, No. 2, p. 20, ¶1207)
A phantom stock plan may be a salary deferral arrangement if its effect is to postpone taxation of an amount, or if there is constructive receipt...
22 May 1990 T.I. (October 1990 Access Letter, ¶1491)
Detailed discussion of proposed arrangement respecting leaves of absence for public sector employees.
88 C.R. - Q.26
if on a specified date under a phantom stock plan the employee is only entitled to receive the increase in the value of the underlying phantom...
88 C.R. - Q.27
where tax deferral has been achieved, this would be a significant factor to be considered in RC's evaluation of the main purpose of the plan.
88 C.R. - Q. 28
plans may have some deferred amounts that are grandfathered while other deferred amounts may not be grandfathered.
86 C.R. - Q.47
six guidelines re what constitutes a SDA.
86 C.R. - Q.48
an arrangement funded solely by employer contributions and that provides for vesting only upon retirement is not a SDA.
ATR-45, February 17, 1992
A share appreciation rights plan involving units whose value was equal to the appreciation in market value of shares of the employer from the date...
Articles
Dov Begun, "Equity Based Compensation and Stock Options", 2017 Annual CTF Conference draft paper
Overview of SDA rules (p. 2)
If an arrangement constitutes an SDA, the following consequences result:
- Subsection 6(11) deems an amount equal to...
Kevin Bianchini, Reuben Abitbol, "Taxation of Stock Appreciation Rights", Taxation of Executive Compensation and Retirement (Federated Press), Vol. 24 No. 8, 2015, p.1655
Description of SARs (p. 1655)
[T]he executive is granted units or stock appreciation rights ("SARs") over a period of time often referred to as...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) | 204 | |
| Tax Topics - General Concepts - Payment & Receipt |
Jim Kahane, Uros Karadzic, Simon Létourneau-Laroche, "A Fresh Look at Retirement Compensation Arrangement: A Flexible Vehicle for Retirement Planning", Canadian Tax Journal (2013) 61:2, 479 – 502.
"One of the main purposes…is to postpone tax" (p. 483)
One might argue that a retirement arrangement was not established to defer tax where the...
Christina Medland, Andrew Stancel, "Tax-effective Risk-adjusted Incentive Arrangements for Public Companies", Taxation of Executive Compensation and Retirement, Vol. 22, No. 9, May 2011: includes overview of cash settled performance share unit plans.
Christina Medland, Jennifer Sandford, "Tax Treatment of Share-Based Compensation", Taxation of Executive Compensation and Retirement, September 2005, p. 583.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(1) - Paragraph 7(1)(a) | 0 | |
| Tax Topics - Income Tax Act - Section 8 - Subsection 8(1) - Paragraph 8(1)(n) | 0 |
Christina H. Medland, "The Potential Effect of the American Jobs Creation Act on Canadian Deferred Compensation Plans", Taxation of Executive Compensation and Retirement, Vol. 16, No. 5, December/January 2005, p. 491.
Simon Thompson, "Canada's Income Tax Rules for Non-Registered Plans: Implications for Foreign Pensions", A Journal of International Taxation, Vol. 15, No. 10, October 2004, p. 34.
Anu Nijhawan, "The Limitations of Deferred Share Unit Plans", Taxation of Executive Compensation, Vol. 16, No. 1, July/August 2004, p. 440.
Christina H. Medland, Ronit Florence, "Pricing of Deferred Share Units - Part 1", Taxation of Executive Compensation and Retirement, Vol. 12, No. 1, July/August 2000, p. 303.
S. Ungurean, "A Deferred Share Unit Plan Receives Revenue Canada Approval", Taxation of Executive Compensation and Retirement, Vol. 9, No. 2, September 1997, p. 19.
V. Bjorndahl, "Share Appreciation Rights (SARs): Possible Risks and Concerns", Taxation of Executive Compensation and Retirement, Vol. 8, No. 8, April 1997, p. 275.
P. Fritze, "Trends in deferred compensation: Limitations and Opportunities", Taxation of Executive Compensation and Retirement, October 1996, p. 195.
Holmes, "Stock-Based Deferred Compensation May be Provided to Employees of Private Corporations", Taxation of Executive Compensation and Retirement, December 1990/January 1991, p. 375.
"Employer's Contribution Towards Stock Plan Allows Tax Deferral for Employee", Taxation of Executive Compensation and Retirement, March 1990, p. 248.
Philp, "Executive and Employee Compensation After Tax Reform", 1988 Conference Report, c. 28.
Gordon, "Deferred Compensation", 1986 Conference Report, c. 34.
Paragraph (k)
Administrative Policy
7 March 2022 External T.I. 2021-0895571E5 - Clarification of Comments in 2020-086483
2020-0864831I7 found that full-value restricted share units (“RSUs”) granted early in the calendar taxation year of the employer (the “Grant...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Salary Deferral Arrangement | an RSU award as signing bonus or inducement to move, or as an award for a current performance accomplishment. might not engage the SDA rules | 347 |
13 November 2020 Internal T.I. 2020-0864831I7 - Equity award plan and recharge agreement
Under an RSU plan established by the U.S. public-company parent (“USCo”) of CanCo, awards of RSUs are made to participants, including CanCo...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(3) - Paragraph 7(3)(b) | s. 7(3)(b) did not apply to recharge agreement reimbursements made to a parent that had the discretion to settle the RSUs in cash | 293 |
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | reimbursement for RSUs issued by parent did not engage s. 15(1) or 246(1) | 175 |
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(1) | no agreement to issue shares under an RSU if the company can choose to settle in cash | 139 |
2015 Ruling 2015-0601441R3 - XXXXXXXXXX Partnership - winding up
No employee income was be triggered by the assumption by the proprietor of DSUs and RSUs on a s. 98(5) wind-up.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) | 98(5) wind-up through s. 85 transfer of partnership interest of one partner to the other and preceded by debt assumptions | 292 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(ii) | interest deductible following assumption of interest-bearing internal debt on s. 98(5) wind-up | 297 |
| Tax Topics - Income Tax Act - Section 34.2 - Subsection 34.2(11) | continuation of s. 34.2(11) reserve following partnership wind-up | 339 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(m) | continued availability of s. 20(1)(m) reserve following s. 98(5) wind-up | 296 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(n) | flow-through of s. 20(1)(n) reserve on s. 98(5) wind-up | 289 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(24) | s. 20(24) election on s. 98(5) wind-up | 307 |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(9) | s. 18(9) deduction claimable by transferee former partner following s. 98(5) wind-up | 241 |
| Tax Topics - Income Tax Act - Section 147.2 - Subsection 147.2(8) | s. 147.2 continuity following s. 98(5) wind-up | 368 |
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(i) | no income inclusion on assumption on s. 98(5) wind-up of DSUs and RSUs | 356 |
7 October 2016 APFF Roundtable Q. 4, 2016-0652801C6 F - Salary Deferral Arrangement
The right to receive an amount under a plan arises on December 31 of Year 1. On March 31 of Year 3, 4 and 5 the individual’s performance for...
24 November 2015 CTF Roundtable Q. 2, 2015-0610801C6 - Salary Deferral Arrangements
CRA has ruled ((e.g. 2005-0144541R3) that units of a 3-year bonus plan that satisfied the conditions of para. (k) in the definition of SDA could...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 6801 - Paragraph 6801(d) | conversions of RSUs to DSUs no longer permitted execept for grandfathered units/no deference to 409A rules | 430 |
20 March 2015 External T.I. 2014-0526941E5 - RSU Plan-Cash Dividend Equivalents
An employer grants restricted stock units to employees that provide them the right to be issued employer shares. Under a proposed amendment,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(1) - Paragraph 7(1)(a) | RSU qualified as s. 7 plan | 41 |
2005 Ruling 2005-0144541R3 - Restricted Share Unit Plan (RSU)
The previous RSU plan (based on satisfaction of the 3-year bonus rule in para. (k)) is replaced by a new RSU plan that permits an exchange of RSUs...
2005 Ruling 2004-0096311R3 - Deferred Share Units - Bonus Plan
The terms of a RSU Plan were modified to ensure that the granting of the units was at the discretion of the CEO in order to ensure that the grant...
2004 Ruling 2004-010150
Ruling that the plan met the conditions in paragraph (k) where there was an award of deferred units (including performance units) to an employee...
2004 Ruling 2004-0088601R3 - RSU plan wherein units can be converted to DSUs
underline;">: RSU Plan. The Company will establish to "Bonus Plans:" an RSU Plan and a PRSU Plan. "Particular Awards" will be granted to RSU...
3 December 2003 External T.I. 2003-0035115 - SDA (K) EXEMPTION
Where the actual receipt of a payment under a particular plan is made at the start of the fourth year (e.g., January 2) after the right to receive...
ATR-64 April 20, 1995 (cancelled)
Favourable ruling re an arrangement under which bonuses are paid within the three-year period contemplated in paragraph (k) by having a specified...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(3) - Paragraph 7(3)(b) | shares purchased through broker | 171 |
Income Tax Technical News, No. 7, 21 February 1996 (cancelled)
Where an employee incentive plan bases a bonus on certain criteria such as appreciation in the employer's stock value, and sales increases, the...
Articles
Paul Carenza, Chris D’Iorio, "Update on Equity-Based Compensation in Canada: Market Trends and Technical Developments", draft 2021 Conference Report paper (Canadian Tax Foundation)
Potential ability to issue cash-settled RSUs early in a year (pp. 29-30)
- In 2020-0864831I7, CRA seemed to indicate that RSUs granted to an...
Dov Begun, "Equity Based Compensation and Stock Options", 2017 Annual CTF Conference draft paper
Need to avoid constructive receipt under a phantom plan (p. 4)
The CRA … interprets the word “received” in the ITA as referring to amounts...