CRA confirms that a subsequent capital loss did not render a capital dividend excessive

CRA took only three weeks to respond to a technical interpretation request by confirming that where a corporation has paid a capital dividend in Year 1 based on a capital gain realized by it in that year, a capital loss realized by it in Year 2 only affects the calculation of its capital dividend account going forward so that no Part III tax on the capital dividend is engaged.

Neal Armstrong. Summary of 22 January 2019 External T.I. 2019-0791631E5 under s. 89(1) – capital dividend account – para. (a).