Accounting Standards for Private Enterprises

Exposure Draft, Redeemable Preferred Shares Issued in a Tax Planning Arrangement


The Accounting Standards Board (AcSB) proposes, subject to comments received following exposure, to amend FINANCIAL INSTRUMENTS, Section 3856 in Part II of the CPA Canada Handbook – Accounting, to require redeemable preferred shares issued in a tax planning arrangement to be presented as liabilities.

Staff Contact(s)

Lester Cheng, CPA, CA

Director, Accounting Standards Board


The proposals in this Exposure Draft are as follows:

  • Paragraph 3856.23, requiring redeemable preferred shares issued in a tax planning arrangement under specific sections of the Income Tax Act to be presented as equity, would be deleted. As a result of this deletion, preferred shares accounted for in accordance with this paragraph would be accounted for consistently with other financial liabilities.
  • The effect of recognizing the liability would be presented as a separate component of equity.
  • Information regarding the nature of the separate component of equity would be disclosed.
  • Retrospective application would be required in accordance with ACCOUNTING CHANGES, Section 1506.