7 October 2011 APFF Roundtable Q. 29, 2011-0412131C6 F - Subsection 55(2) and Capital Dividend Account -- summary under Paragraph 55(2)(c)

If in the year prior to the sale of Opco by Holdco, Opco pays a dividend to Holdco which is subject to s. 55(2), s. 55(2)(b) generally would apply to trigger a capital gain and, thus, an addition to the capital dividend account, at the time of the disposition of the Opco shares. In this regard, CRA stated:

[W]here it is possible to link various events within a single series of transactions or events, for example the payment of a taxable dividend to a corporation on a share in respect of which it is entitled to a deduction under subsection 112(1) and the subsequent disposition of such share by that corporation, the dividend, even if paid in a previous taxation year, would be deemed to be proceeds of disposition of the share as provided in paragraph 55(2)(b).

… Furthermore, in a situation where it was paragraph 55(2)(c) that applied, rather than paragraph 55(2)(b) … the deemed capital gain realized by the corporation for the taxation year in which the dividend was received from the disposition of a capital property could be distributed by it as a capital dividend only in subsequent taxation years.

Topics and taglines
Tagline
d7 import status
Drupal 7 entity type
Node
Drupal 7 entity ID
529422
d7 import status
Drupal 7 entity type
Node
Drupal 7 entity ID
529423
Extra import data
{
"field_editor_tags": [],
"field_roundtable_subquestion": "",
"field_stub": false,
"field_legacy_header": ""
}
Workflow properties
Workflow state