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Post-implementation Review of Section 3856 – AcSB

Date recorded:

At its meeting on July 17, 2019, the AcSB discussed implementation questions stakeholders raised on the amendments to Section 3856, Financial Instruments, issued in December 2018 for retractable or mandatorily redeemable shares issued in a tax planning arrangement. The Board deliberated:

  1. how “Condition 1 – Control” should be interpreted in tax planning arrangements where control of an enterprise is not directly held;
  2. “Condition 2 – No consideration other than shares” and whether nominal consideration in a tax planning arrangement results in this condition not being met; and
  3. “Condition 3– Redemption schedule” and whether a redemption schedule for some of the retractable or mandatorily redeemable shares issued in a tax planning arrangement results in all the remaining shares being classified as a financial liability. The AcSB decided that it will issue additional implementation materials to assist stakeholders with applying the amendments. These materials will outline factors that enterprises might consider when applying professional judgment in determining the appropriate classification of the shares in these arrangements.

Review the Executive Summary on the AcSB's Web site.

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