CRA indicates that cash is property for 55(2.1)(b) purposes

S. 55(2.1)(b)(ii)(B) contemplates the application of s. 55(2) where one of the purposes of a dividend (otherwise than on a redemption) is to significantly increase the cost of the dividend recipient’s property. After noting that cash is property for s. 55 purposes and that cash received on a dividend can be used to purchase any other property or even additional shares of the dividend payor, with a resulting increase in the cost amount of the shares of the dividend payor, CRA concluded that cash thus is property for s. 55(2.1)(b)(ii)(B) purposes.

Neal Armstrong. Summary of 29 November 2016 CTF Annual Roundtable, Q.8 under s. 55(2.1)(b).