After a corporation paid a capital dividend to its two shareholders and before CRA assessed to reduce the corporation’s capital dividend account, one of the two shareholders (“SC”) was dissolved. Would the corporation be permitted as an administrative matter to make the s. 184(3) election, notwithstanding such dissolution? CRA responded:
[T]echnically, the Corporation could not make the subsection 184(3) election. Furthermore, if SC were a "cooperative corporation", as defined in subsection 136(2), our view would be the same.
Furthermore, we do not intend to propose to the Department of Finance that the conditions for making an election by virtue of subsection 184(3) be changed, since there is a valid legislative alternative … . In such a situation, a corporation may apply to the Minister by virtue of subsection 220(3.2) to revoke its election under subsection 83(2) in respect of the dividend it has paid.