CRA considers that a public corporation can make an eligible dividend designation by posting a statement on its website that “all dividends are eligible dividends unless indicated otherwise,” or by providing a notice in an annual or quarterly report. Similarly, can a Canadian controlled private corporation meet this requirement by providing its shareholders with a written notice in advance that all dividends are eligible dividends unless otherwise indicated? After responding negatively, CRA stated:
... 2009-0347491C6 … provided examples of acceptable notifications of the payment of an eligible dividend from a corporation other than a public corporation to the dividend recipient. Examples of notification included identifying eligible dividends through letters to shareholders and dividend cheque stubs, or where all of the shareholders are Directors of a corporation, a notation in the Minutes.
With respect to a notification by way of notation in the Minutes, we have allowed corporations, other than public corporations, to notify their shareholders of an eligible dividend designation in this manner, where all of the shareholders are the directors of the corporation. Our position is based on the fact that, for practical purposes, non-public corporations will generally have fewer shareholders than public corporations, and such shareholders may often have a seat on the corporation’s Board of Directors in order to take part in the internal management of the corporation. Thus, where all of the shareholders are also directors of the corporation, we consider that a directors’ resolution declaring a dividend and containing a designation that such dividend is an eligible dividend constitutes valid notification in writing for the purposes of subsection 89(14).