30 May 2007 External T.I. 2006-0183851E5 F - Paragraphs 83(2) and 84.1(1) -- summary under Paragraph 84.1(1)(b)

Mr. X transfers high-low preferred shares of Opco 1 to Opco 2 (both held by him and related persons) in consideration for a note, such that he is deemed by s. 84.1(1)(b) to receive a dividend. CRA found, after noting that s. 84(7) deemed the dividend to be payable, that Opco 2 may elect under s. 83(2) for the dividend to be a capital dividend.