USco1, a subsidiary of Canco (held directly and through a Canadian subsidiary), will declare and make a distribution which will qualify as a dividend under the local (likely Delaware - see 2002-0135307 F) corporate law. The dividend will be paid out of USco1's "surplus" account as defined under such corporate law. Ruling that the distribution is a dividend and s. 15(1) will not apply.
Summary states that the corporate law "provides for the issuance of par value shares. It is our understanding that paid-in capital can only be returned as a dividend payment from the corporate surplus account."