Subco declared a dividend payable to its parent (Parentco) which, in turn, declared a corresponding dividend to its individual shareholder (Mr. A), with a s. 83(2) election being made in both cases. After finding that such dividends were not paid since there were only accounting entries to accomplish the payments, the Directorate noted that there nonetheless was Part III tax payable because valid s. 83(2) elections had been made, and that the s. 184(3) election was unavailable because:
[I]n order for Mr. A to be taxed on the deemed separate taxable dividend pursuant to paragraph 184(3)(c), he must have received the dividend in question. As noted above, the mere making of the accounting entries … does not in itself constitute the payment by Parentco and receipt by Mr. A of a dividend … .