CRA might apply s. 15(1), but likely not s. 56(2) or 246(1), where a family member subscribes nominal consideration for Opco shares and receives a large discretionary dividend

CRA appears to consider that in the scenario where a company owned by Mr. A ssues a share to Mrs. A for nominal consideration, and then pays a substantial dividend to Mrs. A, it could be difficult to seek to apply s. 56(2) in light of Neuman, but it is more likely that s. 15(1) could be applied “particularly if the amount that is being paid by Mrs. A as consideration for the share does not represent the fair market value of such share at the time of subscription.”

It is quite unlikely that CRA would try to apply Kieboom, under which (in its view) “Mr. A would be considered to have disposed of a… right to dividends in Opco to Mrs. A.” As the s. 73(1) rollover would apply, this disposition by Mr. A would be at cost.

Neal Armstrong. Summaries of 14 March 2016 T.I. 2016-0626781E5 under s. 15(1), s. 56(2) and s. 246(1).