Under an RSU plan established by the U.S. public-company parent (“USCo”) of CanCo, awards of RSUs are made to participants, including CanCo employees, each February. The RSUs vest on a pro-rata basis over a three-year period and are payable upon vesting in common shares of USCo, except that USCo may, in its discretion, settle RSUs in cash.
CanCo reimburses (including through advance payments) USCo for the value of the shares issued or cash paid out by it, and other expenses relating to RSUs that are settled. In concluding that such Reimbursements by CanCo did not generate a benefit under s. 15(1) or 246(1) so as to attract Pt. XIII tax, the Directorate stated:
[T]he Reimbursements would be made pursuant to the Agreement in return for equivalent consideration paid by USCo to CanCo’s employees. CanCo will not confer a benefit on USCo nor suffer any net economic detriment, and the payment will not enrich USCo because of the amounts to be paid to CanCo employees by USCo.