CRA found that a purported deferred share unit plan did not come within the Reg. 6801(d) safe harbour, and was a salary deferral arrangement, since the terms of the plan provided for the potential redemption of units in the event of a change of control of the corporate employer. Accordingly, the participants were required to recognize income on a current basis under ss. 6(11) and (12) because the plan also was offside due to the change-of-control triggering event.
For example, if an advance election has been made by a participant in the 2014 taxation year to have the plan apply to a bonus earned and payable in 2015 and deferred units were thereby credited to his or her account in 2015, the participant would then include in 2015 income the value of units received in respect of the deferred bonus and any dividend equivalents to which the participant was entitled at the end of 2015. The Directorate also stated:
[I]f the taxation year in which an amount under 6(11) and 6(12) is to be included is statute-barred, that amount will be included in the first year subsequent to the barred year.