A dividend computed under s. 84(1) is deemed not to be a dividend by s. 55(2)(a), and the share is disposed of at a gain. Is the addition of "computed without reference to subparagraphs 52(3)(a)(ii) and 53(1)(b)(ii)" to (a)(i)(A) of the CDA definition applicable?
Given that subparagraph 53(1)(b)(ii), as proposed on July 16, 2010, refers to "the portion of the total determined under subparagraph (i) that relates to dividends" and since the amount of the dividend deemed not to be a dividend under paragraph 55(2)(a) is not part of the total determined under subparagraph 53(1)(b)(i), that amount would also not be affected by subparagraph 53(1)(b)(ii). Thus, the proposed amendment to the CDA definition in subsection 89(1) to add the expression "computed without reference to subparagraphs 52(3)(a)(ii) and 53(1)(b)(ii)”, would have no impact when calculating the CDA of a corporation in such a situation.