Subsection 55(2.1)

Paragraph 55(2.1)(b)

See Also

101139810 Saskatchewan Ltd. v. The Queen, 2017 TCC 3

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(5) - Paragraph 55(5)(f) 55(5)(f) designation may be made after assessment under s. 55(2) 245
Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) taxation of same appreciation at individual shareholder level and corporate level under s. 55(2) was not double taxation 270

Administrative Policy

9 May 2018 CPA Roundtable Q. 11, 2018-0765271C6 - Application of 55(2)

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5 October 2018 APFF Financial Strategies and Instruments Roundtable Q. 5, 2018-0761561C6 F - Rachat de parts en cas d’invalidité

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5 October 2018 APFF Roundtable Q. 5, 2018-0768761C6 F - Partage de la déduction accordée aux petites entreprises

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Tax Topics - Income Tax Act - Section 125 - Subsection 125(8) use of personal holding companies precluded assignment 287
Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Designated Member - Paragraph (b) - Subparagraph (b)(i) Serviceco met the 3 conditions for being a designated member 209

2016 Ruling 2016-0652041R3 - Loss consolidation arrangement

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Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) standard triangular loss shift with annual funding of dividends and interest, cashless unwind with set-off and provincial GAAR and s. 55(2) rulings 228

21 November 2017 CTF Roundtable Q. 5, 2017-0726381C6 - 55(5)(f) and 55(2.3) with 55(2.1)

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.3) dividend bifurcation under s. 55(2.3) does not detract from s. 55(2.1) purpose tests being applied to whole dividend 156
Tax Topics - Income Tax Act - Section 55 - Subsection 55(5) - Paragraph 55(5)(f) bifurcated dividends are one dividend for s. 55(2.1)(b) purpose test but not under s. 55(2.1)(c) 100

21 November 2017 CTF Roundtable Q. 3, 2017-0724021C6 - Meaning of purpose

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6 April 2017 External T.I. 2016-0658841E5 F - Purpose tests and Allocation of safe income

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) safe income was allocated between 2 classes of participating shares pro rata to their dividend entitlements 776

13 June 2017 STEP Roundtable Q. 6, 2017-0693411C6 - GAAR on share redemption-55(3)(a)

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13 June 2017 STEP Roundtable Q. 7, 2017-0693421C6 - 55(2) and pipeline planning

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29 November 2016 CTF Roundtable Q. 8, 2016-0671501C6 - 55(2) clause 55(2.1)(b)(ii)(B)

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Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property cash is property in s. 55(2) 9

7 October 2016 APFF Roundtable Q. 14, 2016-0655921C6 F - Safe income on hand - Preferred shares

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) fixed dividends on full-ACB prefs did not come out of SIOH 136

23 June 2016 External T.I. 2016-0627571E5 - Application of proposed amendments to section 55

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2015 Ruling 2014-0552871R3 - Split-Up Butterfly

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution post-butterfly sale of distributed shares by TC1 to TC2/disproportionate split of CDA/assumption of prepaid rent (for which a 20(24) election) treated as boot 709
Tax Topics - Income Tax Act - Section 20 - Subsection 20(24) deferred revenue treated as boot 51

8 June 2016 CTF Technical Seminar: Update on s. 55(2)

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) safe income appropriately reduced by incentive reductions 29
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution butterfly rulings may require amending discretionary shares 50
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.5) significant reduction in value of nominal value share 84

21 December 2015 External T.I. 2015-0617731E5 F - 55(2) and creditor proofing

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3 December 2015 External T.I. 2015-0593941E5 F - Allocation of the safe income on hand

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) flexible allocation of SIOH where discretionary common shares 1215
Tax Topics - General Concepts - Fair Market Value - Shares FMV of discretionary share increased at moment of dividend declaration to exclusion of other discretionary shares 92

17 November 2015 Roundtable, 2015-0613821C6 - TEI question on section 55

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24 November CTF Annual Roundtable, Q.10

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Tax Topics - Income Tax Act - Section 18 - Subsection 18(5) - Outstanding Debts to Specified Non-Residents foreign-currency debt to Canco translated at historical rate 34

2015 Ruling 2015-0604071R3 - Loss Consolidation Arrangement

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Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) loss shift entailing Profitco subscribing for prefs of its Lossco parent, with dividends paid pursuant to support agreement/prefs redeemed wih note 202

9 October 2015 APFF Roundtable Q. 12, 2015-0595601C6 F - Proposed legislation - subsection 55(2)

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(2) no relief under new rules where Part IV tax is refunded on payment of dividend to individual shareholder 181

Articles

Doron Barkai, Alexander Demner, "Dealing with New Subsection 55(2): Issues and Strategies", 2016 Conference Report (Canadian Tax Foundation), 6:1–56

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Rick McLean, "Subsection 55(2): What Is the New Reality?", 2015 CTF Annual Conference paper

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Subparagraph 55(2.1)(b)(i)

Administrative Policy

10 October 2014 APFF Roundtable Q. 20, 2014-0534671C6 F - D&D Livestock

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Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) unjustified duplication of fiscal attributes is abusive 163

Subparagraph 55(2.1)(b)(ii)

Administrative Policy

12 May 2017 External T.I. 2017-0683511E5 F - Purpose tests of a dividend or repurchase of share

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) using s. 55(3)(a) to distribute cash otherwise than from safe income likely abusive 181
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) use of s. 55(3)(a) redemption exception to circumvent safe income limitation could be offensive 52

Paragraph 55(2.1)(c)

See Also

626468 New Brunswick Inc. v. The Queen, 2018 TCC 100

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(5) - Paragraph 55(5)(b) safe income reduced by corporate income taxes 185

Administrative Policy

27 November 2018 CTF Roundtable Q. 1, 2018-0780061C6 - Allocation of safe income

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29 May 2018 STEP Roundtable Q. 4, 2018-0743951C6 - Safe income and estate

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Tax Topics - Income Tax Act - Section 70 - Subsection 70(6) safe income flow through on a spousal rollover of shares on death 63

2015 Ruling 2015-0589471R3 - Earnout

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(g) 5-year earnings based earnout for sale of Holdco common shares by Opco to key employee 794
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Safe Income Determination Time safe income determination time for a subsequent contemplated dividend was immediately before that dividend 512
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) s. 85(1) rollover available on dirty s. 85 exchange 90
Tax Topics - Income Tax Act - Section 7 - Subsection 7(1) - Paragraph 7(1)(a) transactions for using s. 7 rules on sale of non-treasury shares 200

6 June 2017 External T.I. 2016-0658351E5 - Stock dividends and safe income

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.3) illustration of safe income streamed to preferred share stock dividend 369

6 April 2017 External T.I. 2016-0658841E5 F - Purpose tests and Allocation of safe income

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Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) s. 55(2) did not apply to dividends paid only for asset protection and QSBC-status purposes 282

13 June 2017 STEP Roundtable, Q.5

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15 November 2016 Roundtable, 2016-0672321C6 - Guidance on determination of safe income

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Safe Income Determination Time safe income determination time does not commence at beginning of series of regular annual dividends 119

7 October 2016 APFF Roundtable Q. 13, 2016-0652981C6 F - Allocation of the safe income on hand

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7 October 2016 APFF Roundtable Q. 14, 2016-0655921C6 F - Safe income on hand - Preferred shares

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) whether dividends paid on non-participating prefs engage s. 55(2) is a question of fact 83

7 October 2016 APFF Roundtable Q. 15, 2016-0652991C6 F - Application of subsection 55(2) - holding period

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7 October 2016 APFF Roundtable Q. 16, 2016-0653001C6 F - Safe income and freeze preferred shares

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8 June 2016 CTF Technical Seminar: Update on s. 55(2)

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) integration principle/expanded scope/no contemplated sale required/no blanket exemptons/policy similar to boot rules 348
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution butterfly rulings may require amending discretionary shares 50
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.5) significant reduction in value of nominal value share 84

20 April 2016 External T.I. 2016-0633961E5 F - Computation of safe income - stub period

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27 April 2016 External T.I. 2016-0633101E5 F - Attribution of safe income

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) - Distribution discretionary dividend shares may not satisfy the distribution definition 72

9 March 2016 External T.I. 2016-0630281E5 F - Redemption of shares and changes to 55(2)

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(5) - Paragraph 55(5)(f) s. 55(2) application to separate dividend 103
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2) - Paragraph 55(2)(b) demarcation between ss. 55(2)(b) and (c) 278

3 December 2015 External T.I. 2015-0593941E5 F - Allocation of the safe income on hand

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Fair Market Value - Shares FMV of discretionary share increased at moment of dividend declaration to exclusion of other discretionary shares 92
Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) quaere whether 8% reduction is significant 19

10 October 2014 APFF Roundtable Q. 19, 2014-0538041C6 F - 2014 APFF Roundtable, Q. 19 - Stock dividend

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1.1) not engaged if stock dividend is proportional 203
Tax Topics - Income Tax Act - Section 74.4 - Subsection 74.4(2) non-application to stock dividend, cf. s. 86 reorg 243
Tax Topics - Income Tax Regulations - Regulation 6205 - Subsection 6205(2) purpose test in Reg. 6205(2)(a) is not necessarily accomplished by all estate freezes/"arrangement" broad 403

14 February 2014 External T.I. 2012-0454481E5 F - Safe Income

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Tax Topics - Income Tax Act - Section 34.2 - Subsection 34.2(11) transitional reserve deduction is in taxpayer's discretion 53
Tax Topics - Income Tax Act - Section 55 - Subsection 55(5) - Paragraph 55(5)(c) no departures permitted from s. 34.2 adjustments 180

11 October 2013 APFF Roundtable Q. 18, 2013-0495851C6 F - Safe income adjustments

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base downward adjustment under price adjustment clause reduces shares' ACB 85

Articles

Henry Shew, "Safe Income May Vary Within Shares of the Same Class", Canadian Tax Focus, Vol. 8, No. 3, August 2018, p. 3

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Doron Barkai, Alexander Demner, "Dealing with New Subsection 55(2): Issues and Strategies", 2016 Conference Report (Canadian Tax Foundation), 6:1–56

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