What guidance can be provided on the purpose test? Is there a CRA audit manual that could be made available? CRA responded:
A favourable ruling could be provided where all manifestations of purpose and corroborating circumstances support the absence of one of the purposes described in paragraph 55(2.1)(b). The ruling would be conditional on the representation made by the taxpayer that the purposes for which the dividend was paid do not include one of the purposes described in paragraph 55(2.1)(b) and on the completeness of the description of all the manifestations of such purpose and corroborating circumstances. However, other than rulings on loss-consolidation, the CRA has not been deluged by requests for rulings on this topic.
Respecting the second question, CRA stated that the “Manual used … [in] audits of small and medium-sized businesses does not contain any information on the application of subsection 55(2) and the purpose test, in particular.”