Related Discussions

• Redeemable Preferred Shares – AcSB

• Dec 06, 2021

• At its meeting on December 6-7, 2021, the AcSB discussed questions raised by stakeholders with applying the retractable or mandatorily redeemable shares (ROMRS) amendments that are effective for fiscal years beginning on or after January 1, 2021. The Board considered various tax planning arrangements that its Private Enterprise Advisory Committee discussed on October 27, 2021. After considering the Private Enterprise Advisory Committee’s advice, the AcSB decided not to pursue additional standard setting to clarify the amendments. The Board suggests that stakeholders consider the previously issued Basis for Conclusions, podcast series and webinar that provide guidance on applying judgment when implementing the amendments. The Board will continue to monitor the implementation of the amendments and take additional action as needed. The Board encourages stakeholders to raise any implementation concerns using its Contact Us form.

• Redeemable Preferred Shares – AcSB

• Apr 15, 2020

• At its meeting on April 15, 2020, as a result of the impact of the Covid 19 pandemic, the AcSB decided to defer the effective date of these amendments by one year to fiscal years beginning on or after January 1, 2021. Earlier application continues to be permitted.

• Redeemable Preferred Shares – AcSB

• Jul 17, 2018

• At its meeting on July 17, 2018, the Board approved the issuance of final amendments, subject to final drafting and a written ballot.

• Redeemable Preferred Shares – AcSB

• Jun 19, 2018

• At its meeting on June 19, 2018, the AcSB continued discussing feedback on its Exposure Draft. The Board: (i) confirmed an option to recognize the effect of liability classification in either a separate component of equity or retained earnings; and (ii) decided to provide additional transition relief to assist stakeholders with adopting the amendments. The Board also considered proposed drafting changes relating to determining the related party unit of account and transition guidance. The Board will consider a draft of the Basis for Conclusions at its next meeting in July 2018. The Board will issue the final amendments no later than the fourth quarter of 2018 in conjunction with the narrow-scope amendments to Section 3856, Financial Instruments.

• Redeemable Preferred Shares – AcSB

• May 15, 2018

• At its meeting on May 15, 2018, the AcSB continued discussing feedback from stakeholders and the recommendations from its PEAC on its Exposure Draft. The Board decided: (i) to provide an option to present the effect of liability classification of retractable or mandatorily redeemable shares in either retained earnings or a separate component of equity; (ii) no additional transitional relief is necessary for the application of substantive rights guidance; (iii) additional guidance on determining the related party unit of account is necessary and provided feedback on an initial draft of the guidance; (iv) to provide guidance on assessing whether a tax planning arrangement undertaken in a series of steps should be viewed as one tax planning arrangement; and (v) to clarify whether the decision tree in Financial Instruments, paragraph 3856.A29 also applies to retractable or mandatorily redeemable shares issued in a tax planning arrangement. The Board will issue final amendments no later than the fourth quarter of 2018 in conjunction with the narrow-scoped amendments to Section 3856.

• Redeemable Preferred Shares – PEAC

• May 03, 2018

• At its meeting on May 3, 2018, the PEAC continued discussing feedback from outreach activities and response letters on the Exposure Draft. Committee members advised the Board to: (i) provide an option to present the effect of liability classification of retractable or mandatorily redeemable shares in either retained earnings or a separate component of equity; (ii) provide guidance on assessing whether a tax planning arrangement undertaken in a series of steps should be viewed as one tax planning arrangement; and (iii) clarify whether the decision tree in Financial Instruments, paragraph 3856.A29 also applies to retractable or mandatorily redeemable shares issued in a tax planning arrangement.

• Redeemable Preferred Shares – AcSB

• Mar 20, 2018

• At its meeting on March 20-21, 2018, the AcSB began deliberating comments received from stakeholders and the recommendations from its PEAC on how to proceed with the proposals given the feedback received to the Exposure Draft. The Board decided to: (i) revise “Condition 2 – Redemption schedule” by replacing the reference to “explicit or implicit arrangements” in proposed paragraph 3856.23 (c) with “written or oral arrangements”, consistent with the language in the Exposure Draft, “Accounting for Related Party Financial Instruments and Significant Risk Disclosures (Proposed amendments to Financial Instruments, Section 3856”; (ii) update “Condition 3 – No consideration other than shares exchanged” to clarify that this condition can apply to transactions that involve more than one class of shares; (iii) include in Section 3856, Financial Instruments, the illustrative example relating to joint control that had been provided in the Exposure Draft’s Basis for Conclusions; and (iv) provide an option to classify the shares as a financial liability even if all the conditions for the classification exception could be met. The Board also discussed whether: guidance was necessary to assess the related party unit of account; stock dividends should be within the scope of the classification exception; an option to present the effect of liability classification to retained earnings should be provided. The Board further considered the PEAC’s comments on whether transitional provisions were necessary in circumstances when information about a tax planning arrangement could not be obtained. The Board will continue deliberating this topic in its May 2018 meeting. It plans to issue the final amendments no later than the fourth quarter of 2018.

• Redeemable Preferred Shares – PEAC

• Feb 07, 2018

• At its meeting on February 7, 2018, the PEAC discussed a summary of the feedback obtained from outreach activities on the Exposure Draft, “Retractable or Mandatorily Redeemable Shares Issued in a Tax Planning Arrangement.” Committee members advised the Board to consider: (i) clarifying “Condition 2 – Redemption schedule” by removing reference to “implicit arrangements”; (ii) revising “Condition 3 – No consideration other than shares exchanged” to more clearly reflect that this condition applies to transactions that involve more than one class of shares; and (iii) providing an option for liability classification when all the conditions for equity classification of retractable or mandatorily redeemable shares are met or a stakeholder chooses not to assess whether all the conditions are met. Committee members also discussed feedback on the transitional relief the Board proposed and expressed mixed views about whether additional transitional relief was necessary in circumstances when information about a tax planning arrangement could not be obtained.

• Redeemable Preferred Shares – AcSOC

• Oct 26, 2017

• At the AcSOC meeting on October 26-27, 2017, the Director, Accounting Standards of the AcSB reported that the proposed exception in the recently issued Exposure Draft to treat shares issued in a tax planning arrangement as equity when certain specified conditions are met is a compromise, as these shares are conceptually financial liabilities. This would result in a change in practice that would be significant for some, but represents a compromise from the full removal of the option for an exception from liability treatment. The AcSB has formulated a comprehensive consultation plan and will consult with stakeholders across Canada.

• Redeemable Preferred Shares – AcSB

• Jul 13, 2017

• At its meeting on July 13, 2017, the AcSB considered the proposed drafting of the amendments and key areas of the Basis for Conclusions. The Board also decided that: (i) shares classified as liabilities on initial recognition cannot subsequently be reclassified as equity; and (ii) shares classified as a liability should be measured at the redemption amount. The Board considered a communication plan for the forthcoming exposure draft and decided on its outreach activities with stakeholders. The Board directed staff to begin the balloting process for the proposals and will issue a re-exposure draft no later than September 30, 2017.

• Redeemable Preferred Shares – AcSB

• Jun 22, 2017

• At its meeting on June 22, 2017, the AcSB continued its discussion on the circumstances in which classification of redeemable preferred shares may need to be reassessed after initial recognition. The Board reaffirmed its view that the need to reassess classification should be based on the occurrence of an event or transaction and decided on some examples that should be provided in the guidance. The Board also decided that: (i) on transition, enterprises will be provided an option to not restate comparatives; (ii) the proposed effective date of the amendments will be January 1, 2020; and (iii) Section 1500, First-time Adoption, will be amended to allow the same transitional relief for enterprises applying Accounting Standards for Private Enterprises subsequent to the date that the amendments are made effective. The Board will issue a re-exposure draft on these proposals no later than September 30, 2017.

• Redeemable Preferred Shares - AcSB

• May 16, 2017

• At its meeting on May 16, 2017, , the AcSB discussed: (i) Initial measurement for shares issued to a related party; (ii) Reassessment criteria; (iii) Presentation and disclosures; and (iv) Transition requirements. The Board will issue a re-exposure draft on these proposals no later than September 30, 2017.

• Redeemable Preferred Shares - AcSB

• Mar 21, 2017

• At its meeting on March 21-22, 2017, the AcSB reaffirmed its view that the basis for the exception should be on the condition of retention of control of the enterprise and decided that the control of the enterprise must be retained by the party receiving the redeemable preferred shares. The AcSB further decided on the additional conditions necessary to qualify for equity classification which determine that control of the future cash outflows of the enterprise has not changed. The AcSB also decided that additional guidance relating to substantive rights should be added in Section 1591, Subsidiaries, to provide sufficiently robust guidance to address the characteristics of the redeemable preferred shares issued in a tax planning arrangement. The AcSB will continue its discussion on transitional provisions and begin its discussion on disclosure requirements at its May 2017 meeting. Accordingly, the AcSB is expecting to issue a re-exposure draft during the third quarter of 2017.

• Redeemable Preferred Shares - PEAC

• Feb 02, 2017

• At its meeting on February 2, 2017, the PEAC discussed the results of field testing conducted to assess the viability of permitting a classification exception on the condition of retention of control of an enterprise. In particular, the Committee discussed: (i) whether the current guidance in Section 1591, Subsidiaries, is sufficiently robust to address the characteristics of redeemable preferred shares issued in a tax planning arrangement; (ii) the perspective from which control of the enterprise should be considered; and (iii) other conditions that are necessary, in addition to retention of control over the enterprise. Committee members provided feedback on the types of arrangements that would not meet the classification exception and the potential effect on practice. Committee members also provided input on the overall project timeline.

• Redeemable Preferred Shares - AcSB

• Jan 12, 2017

• At its meeting on January 12, 2017, the AcSB decided that the basis for the classification exception should be on the condition of retention of control of an enterprise and that additional guidance may be needed relating to the control assessment. In addition, the AcSB decided that other conditions are necessary in order to qualify for the classification exception. The AcSB noted that at least some of the tax planning arrangements that meet the classification exception under the current guidance will not qualify for the exception under the proposed basis. Accordingly, the AcSB directed the staff to obtain feedback from its Private Enterprise Advisory Committee on the effect of its decisions on current practice. At its March 21-22, 2017 meeting, the AcSB will consider the input received from the Committee. The AcSB will also begin to discuss transitional provisions.

• Redeemable Preferred Shares - PEAC

• Dec 01, 2016

• At its meeting on December 1, 2016, the PEAC discussed the status of ongoing field testing to assess the viability of applying “retention of control of an enterprise” as a condition for a classification exception. The Committee also reviewed details of one of the tax planning arrangements being analyzed by the field testing participants. Committee members provided input on the arrangement.  Committee members provided further input into an analysis of the following issues: (i) other conditions that should be met in order for the classification exception to be permitted, in addition to retention of control of the enterprise; and (ii) reclassification considerations.

• Redeemable Preferred Shares Issued in a Tax Planning Arrangement - PEAC

• Jun 14, 2016

• At its meeting on June 14, 2016, the Private Enterprise Advisory Committee (PEAC) discussed an analysis of the viability of a classification exception on the basis of retention of control over the enterprise. Specifically, the Committee discussed the challenges with applying the concept of control as a condition to the various characteristics of tax planning arrangements. The Committee also provided further input into an analysis of the following issues for consideration: (i) the definition of tax planning arrangements; (ii) conditions that should also be met in order for the classification exception to be permitted, in addition to the retention of control; (iii) reclassification considerations; and (iv) presentation and disclosure.

• Redeemable Preferred Shares - AcSB

• May 18, 2016

• At its meeting on May 18, 2016, the AcSB discussed an analysis of the viability of a classification exception on the basis of retention of control over the enterprise. In particular, the AcSB discussed the potential challenges with basing the classification exception solely on control, and what further work should be done. In that regard, the AcSB directed staff to take the time necessary to conduct further testing of the characteristics of tax planning arrangements and to identify the arrangements that would and would not meet the classification exception if it were based on retention of control over the enterprise.

• Redeemable Preferred Shares - AcSB

• Mar 22, 2016

• At its meeting on March 22-23, 2016, the AcSB received a summary of the additional analysis conducted relating to the scope of the classification exception and the characteristics of tax planning arrangements, as well as feedback from the Private Enterprise Advisory Committee on that analysis. In addition, the AcSB discussed alternative bases under which a classification exception might be considered. In that regard, the AcSB directed the staff to further explore the viability of a classification exception on the basis of retention of control over the enterprise, as advised by the Committee.

• Redeemable Preferred Shares - AcSB

• Nov 24, 2015

• At its meeting on November 24, 2015, the AcSB continued its deliberations and, in particular, discussed next steps in response to the comment letters and roundtable discussions on the Exposure Draft, Redeemable Preferred Shares Issued in a Tax Planning Arrangement. The AcSB agreed that alternatives to the manner in which the classification exception is described in Financial Instruments, paragraph 3856.23, should be explored. To facilitate the development of alternatives, the AcSB directed the staff to further analyze the scope of the exception and the characteristics of inter-generational transfers

• Redeemable Preferred Shares Issued in a Tax Planning Arrangement - AcSB

• May 25, 2015

• The Accounting Standards Board (AcSB) continued discussions of respondents’ comments, including the results of the roundtable discussions with stakeholders, on the Exposure Draft, “Redeemable Preferred Shares Issued in a Tax Planning Arrangement.” Many respondents noted that the Exposure Draft proposals were based on discussions with creditors and suggested that additional types of users should be consulted. These respondents noted that other users may not understand the results of reporting redeemable preferred shares issued in a tax planning arrangement as liabilities. The AcSB decided to consider the results of the user outreach on the Invitation to Comment before further deliberating this issue. In light of the above decision, and the time needed to fully consider other issues and comments raised by respondents, the AcSB agreed that any change as a result of this project will not be published prior to January 1, 2016. Accordingly, the AcSB decided that the effective date of any such change will be no earlier than January 1, 2018

• Redeemable Preferred Shares Issued in a Tax Planning Arrangement - AcSB

• Mar 18, 2015

• The AcSB began considering responses to its Exposure Draft, “Redeemable Preferred Shares Issued in a Tax Planning Arrangement,” as well as the results of all roundtable discussions with stakeholders, including the additional discussions conducted in January and February 2015 with practitioners and lenders that use financial statements. The AcSB agreed that redeemable preferred shares issued in a tax planning arrangement (as addressed in Financial Instruments, paragraph 3856.23) meet the definition of a liability. The AcSB will consider whether there are sufficient cost/benefit considerations to retain equity treatment for certain redeemable preferred shares issued in a tax planning arrangement. The AcSB also discussed whether further consultations with financial statement users should be undertaken. No decisions were made on this issue. The AcSB will continue discussions of this topic at its May 2015 meeting