CRA confirms use of s. 214(6) deemed dividend designation as a planning tool

At the IFA Conference in May, CRA addressed the situation where, as a result of the new thin cap rules, interest paid to an affiliated non-resident is deemed to be a dividend, and orally indicated that s. 214(16) designations effectively may be used to determine the timing of such deemed dividend.

In the written response (available on the IFA website but not yet released by CRA), CRA added a simple numerical example, showing that such designations could be made to "back-end" the deemed dividend to the last interest payment(s) of the year, thereby reducing or eliminating interest charges.

Neal Armstrong.  Summary of IFA Conference, Q. 7, Written Response under s. 214(6).