CRA announces a moratorium on providing interpretations on safe income allocation to discretionary dividend shares

CRA is troubled by the valuation difficulties attendant on discretionary dividend shares and their potential misuse for value shifting or income splitting, and has announced a moratorium on commenting on safe income allocation questions respecting such shares until it has studied the area further. This moratorium does not detract from the Rulings Directorate being “open for business” with respect to other s. 55 issues.

CRA was not receptive to a suggestion that safe income computations could be skipped in the simple case of a holdco/opco structure and no or limited differences in accounting versus taxable income.

Neal Armstrong. Summary of 2016 CTF Annual Roundtable, Q.2 under s. 55(2.1)(c).