26 May 2016 IFA Roundtable Q. 3, 2016-0642111C6 - PUC of Shares of a FC Reporter -- summary under Subsection 84(3)

CRA considered that a Canadian corporation which has the U.S. dollar as its elected functional currency nonetheless is required to keep track of the paid-up capital of its shares, so that if it issued U.S.$100,000 of shares when the Canadian dollar was at par and redeemed those shares when their Canadian-dollar equivalent was $125,000, there would be a resulting deemed dividend of $25,000 to the shareholder (unless the shareholder was a Canadian corporation that also had the U.S. dollar as its functional currency for the relevant period.). Thus, a U.S. shareholder receiving such redemption proceeds would be subject to Part XIII tax. However, there would be no Part VI.1 tax, as that tax relates to the tax results of the corporation rather than its shareholder.