29 June 2007 Internal T.I. 2007-0229431I7 F - Excessive Capital Dividend -- summary under Paragraph 184(3)(d)

A corporation owed a dividend, interest and salary and wages to its shareholders, and effected part payment by way of set off. The total amount of the dividend was elected upon as a capital dividend, but on audit, such dividend amount was determined to exceed the corporation’s capital dividend account. The Directorate indicated that the excessive dividend paid for s. 184(3(d) purposes was to be computed by multiplying the amount paid divided by the proportion the excessive dividend was of the total dividend payable.