DFK Tax Digest – Fall 2021

  • Hybrid Transactions – Hybrid transactions were born out of an apparent need for compromise where a purchaser prefers to acquire assets and the vendor prefers to sell shares.  Subsequent to the decision in Geransky v. R. 2001 D.T.C. 243 the use of hybrid transactions evolved in many forms and seemed to be widely accepted by CRA assuming the transactions met the general criteria contained in Technical Interpretation 2003-0029955.
  • Changes to Stock Option Benefits and Deductions – The 2019 Federal Budget and the draft legislation released June 17, 2019 announced changes to the taxation of stock options granted on or after January 1, 2020.  Subsequently, the November 30, 2020 Fall Economic Statement confirmed that the federal government intended to proceed with revised changes to the taxation of stock option benefits but deferred the effective date to options granted on or after July 1, 2021 for corporations other than Canadian Controlled Private Corporations (CCPCs).  On June 29, 2021, legislation for the new rules received Royal Assent and passed into law.
  • Tenant Inducement Payments – Two important 1998 Supreme Court of Canada decisions, the Canderel and Toronto College Park,  provided that tenant inducement payments (TIPs) are fully deductible as a current expense by the landlord against the current year income in the year in which payments are made.