taxable preferred shares

Preferred shares – Liability or equity?

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There has been significant debate over the years regarding the financial statement presentation of redeemable or mandatorily retractable shares (RoMRS) as either a liability or equity. First, a bit of background When Accounting Standards for Private Enterprises (ASPE) were issued in 2011, it was determined that RoMRS should continue to be recorded at par, stated or assigned value in a separate component of equity.  An amendment to ASPE reporting of….

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Estate Planning

Taxable preferred shares and estates – say what?

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The tax reform of 1987 introduced the term “taxable preferred shares”[1] to curtail the tax advantage for non-taxpaying corporations using preferred share financing over debt financing. The result of this reform subjected the non-taxpaying corporation to a (current) 25 per cent tax on dividends that were paid on taxable preferred shares in excess of a specified dividend allowance.  This tax imposed under the Income Tax Act is referred to as….

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Estate Planning, Tax Issues, Trusts
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