Vendors may proceed with a preliminary reorganization before a share sale and agree in advance that elections will be made in the event of there having been excessive eligible dividend designations.
- Will CRA accept an advance concurrence to the making of the s. 185.1(3) election regarding an excessive eligible dividend designation?
- Are amended T5 slips regarding an excessive eligible dividend necessary?
CRA responded:
(a)
… In a context similar to that described in the statement of this question, the CRA generally accepts that shareholders may give their concurrence in advance, through undertakings under the various sale agreements, to the making of [the] election … .
(b)
Where a corporation files an election under subsection 185.1(2), the CRA requires the corporation to provide, inter alia, at the time of the election, either the revised amounts of eligible dividends and of separate ordinary taxable dividends to each shareholder, or copies of T5 slips.