Q.12 In what situations does s. 125.7(14.1) apply, given that s. 125.7(2.01) seems to apply in the same circumstances?
CRA responded:
Taxable dividends paid in certain qualifying periods by a certain type of eligible entity on its common shares held by individuals are relevant for each of subsection 125.7(2.01) of the Act and subsection 125.7(14.1) of the Act.
If subsection 125.7(2.01) of the Act applies in a particular qualifying period, the eligible entity is not eligible for a Wage Subsidy in respect of that qualifying period. On the other hand, subsection 125.7(14.1) of the Act imposes a requirement on a certain type of eligible entity to repay all or a portion of the Wage Subsidy received for the twenty-fourth qualifying period and any subsequent qualifying period. In such a case, taxable dividends paid in the twenty-fourth qualifying period and any subsequent qualifying period by a particular eligible entity that is a publicly traded company or a subsidiary of such a company to individuals who hold its common shares will affect the amount of the Wage Subsidy that must be repaid if the amount of such taxable dividends is greater than the eligible entity’s ECRA. The same taxable dividends may be relevant for the purposes of both subsection 125.7(2.01) of the Act and subsection 125.7(14.1) of the Act.
For example, consider an eligible entity that was not entitled to a Wage Subsidy because of the application of subsection 125.7(2.01) of the Act in the twenty-fourth qualifying period because it paid $100,000 of taxable dividends on its common shares held by individuals. These same dividends will also be included in the calculation of the total amount of taxable dividends paid for purposes of Paragraph B.