Principal Issues: Whether the directors of a corporation must have authorized the CDA election before the time the dividend is declared or before the late-filed CDA election is filed in order to meet the condition provided under paragraph 83(3)(c)?
Position: The directors must have authorized the late-filed CDA election before the time the election is made.
Reasons: According to the law.
FEDERAL TAX ROUNDTABLE OCTOBER 7, 2019
2019 APFF CONFERENCE
Question 13
Late CDA election
Subsection 83(3) sets out the circumstances in which a late election may be made in respect of the CDA. Paragraph (c) states: “the directors or other person or persons legally entitled to administer the affairs of the corporation have, before the time the election is made, authorized the election to be made.”
Question to the CRA
To make a late CDA election, must the directors have authorized the CDA before the time of the declaration of the dividend or before the time of the late election?
CRA Response
The condition set out in paragraph 83(3)(c) is satisfied when the directors or other person or persons legally entitled to administer the affairs of the corporation have, before the time the election is made, authorized the election to be made. In that regard, we refer you to paragraph 1.21 of Income Tax Folio S3-F2-C1, "Capital Dividends" (footnote 1).
Nathalie Aubin
(514) 496-5984
October 11, 2019
2019-081272
FOOTNOTES
Due to our system requirements, footnotes contained in the original document are reproduced below:
1 CANADA REVENUE AGENCY, Income Tax Folio S3-F2-C1, "Capital Dividends", July 25, 2019.