Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: additional transaction: cash dividend out of CDA to be paid to individuals.
Position: acceptable as payments to individuals do not affect 55(3)(b) ruling
Reasons:
XXXXXXXXXX
XXXXXXXXXX 1-982959
XXXXXXXXXX
Attention: XXXXXXXXXX
XXXXXXXXXX, 1998
Dear Sirs:
Re: Advance income tax ruling #3-981367
dated XXXXXXXXXX, 1998 issued to
XXXXXXXXXX (the “Ruling Letter”)
We are writing in response to your telephone call of XXXXXXXXXX, 1998 wherein you informed us of the following transaction:
“18A. Prior to the transaction described in paragraph 19 below, XXXXXXXXXX will declare and pay a cash dividend on its common shares and elect pursuant to subsection 83(2), in prescribed manner and prescribed form, such that the dividend shall be deemed to be a capital dividend. The amount of such dividend will be equal to the amount of the CDA of XXXXXXXXXX at the time of the declaration of the dividend.”
In addition, the references to paragraph 23 contained in Ruling A should be changed to paragraph 20.
You have advised us that there have not been any other changes to the relevant facts and proposed transactions described in the Ruling Letter. Subject to the conditions stated therein, we confirm that the Ruling Letter will continue to be binding on Revenue Canada.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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