The calculation and disclosure of "distributable cash" is strictly defined
The proposed tax legislation for business trusts includes a number of precise requirements for the calculation and disclosure of distributable cash. These and other changes to taxation may have a significant impact on the entity's valuation and its business model sustainability. On November 6, 2006, the Canadian Institute of Chartered Accountants released its draft guidance on reporting distributable cash in Management's Discussion and Analysis (MD&A). Management of trusts should review this guidance to ensure that they understand and meet complex new financial reporting requirements.
The CICA's draft guidance on reporting "distributable cash" in Management's Discussion and Analysis (MD&A) addresses four key questions.
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