Words and Phrases - "equity"

a
88
b
44
c
78
d
52
e
38
f
31
g
19
h
14
i
74
j
2
k
2
l
32
m
56
n
25
o
38
p
81
q
3
r
76
s
90
t
47
u
16
v
9
w
23
y
2

8 January 2016 Internal T.I. 2015-0604491I7 - mandatory redeemable preferred shares

Summary Under
Tax Topics - Income Tax Act - Section 90 - Subsection 90(2)
distributions on MRPS were equity distributions

CRA applied the two-step approach to entity classification to find that MRPS (Luxembourg hybrid instruments which were “very similar to traditional shares under Canadian business corporations statutes”) were equity. They were governed by articles of incorporation, ranked after debt in a bankruptcy, could only be redeemed from funds available for distribution under Luxembourg law or from the proceeds of a new share issuances and voted on corporate matters such as the election of directors (although being non-voting would not have established that they were not shares). CRA also stated:

The fact that the MRPS must be redeemed on or before a stipulated date does not detract from their character as shares.

Words and Phrases
equity
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Share MRPS (Luxembourg hybrid instruments which were “very similar to traditional shares under Canadian business corporations statutes”) were equity 731