Restrictions Applicable to Certain Investment Trusts With Respect to Stapled Securities
An entity that is a specified investment flow-through trust (SIFT trust) or a real estate investment trust (REIT) cannot claim in calculating its income a deduction for an amount paid or payable, as applicable:
- as interest on a debt or an obligation that is a stapled security, unless each reference security of the stapled security is also a debt or an obligation;
- 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 to a 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.
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.