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.
Principal Issues: Where a corporation makes an election under subsection 14(1.01) of the Income Tax Act (the "Act") what is the effective date of the addition to the CDA.
Position: The current legislation allows a taxpayer to make the election in the taxpayer's return of income for a taxation year of the disposition, however, there is a pending amendment that will allow a taxpayer to make both elections on the same day and make the resulting entries to the CDA at that time.
Reasons: Pending legislation for 14(1.01)
September 20, 2005
Halifax Tax Services Office HEADQUARTERS
Ms. Mary Potter Charles Rafuse
Business Enquiries Unit 613-957-8967
2005-014767
Capital Dividend Account
This is in reply to your email of August 18, 2005, concerning the timing of capital dividend account (CDA) inclusions.
Specifically, you have asked where a corporation makes an election under subsection 14(1.01) of the Income Tax Act (the "Act") what is the effective date of the addition to the CDA.
Under subsection 14(1.01), a taxpayer may elect to report a capital gain on the disposition of eligible capital property. The current legislation allows a taxpayer to make the election in the taxpayer's return of income for a taxation year of the disposition, however, there is a pending amendment that will allow the election to be made with an election under subsection 83(2) of the Act. This will allow a taxpayer to make both elections on the same day and make the resulting entries to the CDA at that time. The pending amendment generally applies to dispositions of eligible capital property that occur on or after December 20, 2002. It was announced in press release 2005-049, dated July 18, 2005, Revised Legislative Proposals Released Relating to the Taxation of Non-Resident Trusts and Foreign Investment Entities and Other Technical Amendments to the Income Tax Act.
We trust this information is helpful.
Charles Rafuse
For Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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