{"id":580,"date":"2013-04-08T15:32:18","date_gmt":"2013-04-08T15:32:18","guid":{"rendered":"https:\/\/thor.ca\/\/blog\/?p=580"},"modified":"2025-02-12T13:29:32","modified_gmt":"2025-02-12T21:29:32","slug":"cra-confirms-position-on-tracking-shares","status":"publish","type":"post","link":"https:\/\/www.thor.ca\/blog\/2013\/04\/cra-confirms-position-on-tracking-shares\/","title":{"rendered":"CRA confirms position on tracking shares"},"content":{"rendered":"<p>In <a href=\"http:\/\/thor.ca\/blog\/wp-content\/uploads\/2013\/04\/2012-0443471E5.pdf\">2012-0443471E5<\/a>, the Canada Revenue Agency (CRA) confirmed its position that so-called \u201ctracking shares\u201d are \u201ctaxable preferred shares\u201d.  The term &#8220;tracking shares&#8221; (as well as \u201calphabet shares\u201d and \u201ctargeted shares\u201d) has typically been used to describe a special class of shares of a company where the dividend rights are based on the profits of a particular division, activity, or subsidiary of the company.  Such shares are intended to \u201ctrack\u201d the financial performance of the particular division, activity, or subsidiary in question \u2013 and thereby reflect its value.  Tracking shares have been issued by public companies in the US, but are rare in Canada.  In Canada, an important tax issue has been whether the tracking shares engage the special \u2013 and potentially punitive \u2013 tax regime applicable to \u201ctaxable preferred shares\u201d (in Part IV.1 and Part VI.1).  The CRA has consistently taken the position that when dividends are established by a legally-binding formula (even a formula that contains a variable, such as defined net profits), the amount of such dividends will be considered to be &#8220;fixed&#8221; in the sense of \u201cset\u201d or \u201cestablished\u201d by the formula.  In the CRA\u2019s view, this legal feature would be sufficient to cause the shares to be taxable preferred shares as defined in s. 248(1).<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In <a href=\"http:\/\/thor.ca\/blog\/wp-content\/uploads\/2013\/04\/2012-0443471E5.pdf\">2012-0443471E5<\/a>, the Canada Revenue Agency (CRA) confirmed its position that so-called \u201ctracking shares\u201d are \u201ctaxable preferred shares\u201d.  The term &#8220;tracking shares&#8221; (as well as \u201calphabet shares\u201d and \u201ctargeted shares\u201d) has typically been used to describe a special class&hellip;<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-580","post","type-post","status-publish","format-standard","hentry","category-corporate-tax"],"_links":{"self":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/580","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/comments?post=580"}],"version-history":[{"count":1,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/580\/revisions"}],"predecessor-version":[{"id":2786,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/580\/revisions\/2786"}],"wp:attachment":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/media?parent=580"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/categories?post=580"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/tags?post=580"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}