Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: The taxability of shares received as dividends in kind
Position: The fair market value of the shares is treated as dividend income
Reasons: The shares distributed represent property distributed by the corporation to its shareholders on a pro-rata basis.
XXXXXXXXXX 1999-000863
F. Francis
January 28, 2000
Dear Sir:
Re: T5 issued for restricted stock shares
This is in reply to your letter of November 17, 1999, wherein you requested our comments with respect to the tax consequences of certain shares of XXXXXXXXXX that you received from XXXXXXXXXX as a shareholder of XXXXXXXXXX pursuant to a company dividend program. You advise that you have received a T5 which reports the shares as dividend income.
As stated in Income Tax-Technical News No. 11, where a corporation distributes property owned by it to its shareholders on a pro-rata basis, such a distribution is a dividend for purposes of the Income Tax Act. The amount of the dividend is the fair market value of the shares of XXXXXXXXXX on the date that you received those shares.
We trust the above comments are of assistance to you. However, as noted in Information Circular 70-6R3 issued on December 30, 1996, these comments are not binding on the Canada Customs and Revenue Agency.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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