5.4 Restrictions applicable to certain investment trusts with respect to stapled securities
5.4 Restrictions applicable to certain investment trusts with respect to stapled securities
In calculating its income, a given entity that is a specified investment flow-through (SIFT) trust or a real estate investment trust (REIT) cannot claim a deduction for an amount paid or payable, as the case may be:
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as interest on a debt or obligation that is a stapled security, unless each reference security of the stapled security is also a debt or an obligation;
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to a REIT or a subsidiary of a REIT (or to a person or partnership that pays an amount, or has an amount paid, to such a REIT or subsidiary of a REIT), if a security of the entity or of one of the subsidiaries of the entity, or of an entity of which the entity is a subsidiary, is a reference security of a stapled security issued by the REIT or a subsidiary of the REIT.
Note that if a security of the trust ceased to be a stapled security and then became stapled once again, and the trust claimed the above-mentioned deduction in the period during which the security was no longer a stapled security (referred to as the "period of unstapling"), the trust must include in its income the amount of the deduction.
Sections 92.31, 92.32 and 158.16 to 158.18
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