Q.14(a)(1)
Essentially the same question and response as immediately below for 2013-0475261E5 respecting an excessive capital dividend, so that the late designation is available respecting a separate deemed dividend paid by virtue of a s. 184(3) election made because of an excessive capital dividend paid out of the capital dividend account where the GRIP balance is sufficient, the CDA was calculated with care, there was no "apecific intetnion" at the pyament time to apply for a late designation, there has not been a series of late designation requests and the request is not made in the context of abuisive tax planning.
Q.14(a)(2)
As a result of a corporation being found on audit to have been carrying on a personal services business, it retroactively acquires a GRIP balance. CRA indicated that a late designation for dividends already paid generally would be accepted provide the following conditions were satisfied:
- the general rate income pool of the corporation is sufficient so as not to result in an excessive eligible dividend designation;
- the request for late designation is not made in the context of abusive tax planning;
- The corporation had reviewed the SBD rules and the personal services business definition with care before completing its returns, and the corporation had substantial ("serieux") arguments for considering that it was entitled to the SBD;
- The corporation or its representatives were not simply recless in applying the provisions of the Act regarding the SBD rules. The late designation request did not involve aggressive tax planning.
Q.14(b)
In complying with a request for an example of what CRA meant by making late designation requests deliberately or on a regular basis, CRA referred to the stituation where(TaxInterpretations translation):
a corporation which pays annual dividends in cash (or through a reduction in the amount owing to its shareholder) but does not make a designation under subsection 89(14) at the time of payment of the dividend because it is not in a position to determine the amount of the general rate income pool at that time.