CRA considers dividends of mortgage investment corporations to be subject to Part XIII tax

Dividends paid by a mortgage investment corporation are deemed to be interest paid on a bond.  In CRA’s view, such deemed interest is "computed by reference" to income, profit, cash flow or other similar criteria described in the participating debt interest definition, so that such interest is subject to Part XIII tax.

This approach implicitly denigrates the role of the directors, who set dividends in their discretion rather than simply taking out their calculators to multiply the quarterly income by X%.

Neal Armstrong.  Summary of 2013 Refusal to Rule 2013-0475701R3 under s. 212(3) – participating debt interest.