CRA indicates that a dividend substitution election does not require a QSC

CRA has indicated that a s. 212.3(3) dividend substitution election can be made by a corporation resident in Canada (CRIC) under the foreign affiliate dumping rules even if there is no qualifying substitute corporation in the group.   This means that even in these circumstances, the election may be used to determine which non-resident corporation received the s. 212.3(2) dividend from the CRIC, or which class of shares such dividend was paid on; and also can avoid a requirement to trace PUC to the non-resident investment.  See Example 3-B.

Neal Armstrong.  Summary of 23 May 2013 IFA Round Table, Q. 6(h) under s. 212.3(3).