CRA now is willing to accept conditional s. 184(3) elections

If a capital dividend paid by a corporation to its individual shareholder is disallowed by CRA (so that Part III tax is assessed), a dilemma arises: if a timely election under s. 184(3) is made to convert the dividend into a taxable dividend so as to eliminate the Part III tax, then that dividend cannot be converted back into a capital dividend if the objection to the Part III tax assessment ultimately is successful.  Contrary to an earlier position, CRA now is prepared to hold the processing of the s. 184(3) election in abeyance, so that it will be treated as void if the taxpayer’s objection is successful, and treated as timely filed if the objection (or subsequent appeal) is dismissed.

Neal Armstrong.  Summary of 4 December 2013 T.I. 2013-0504951E5 under s. 184(3).