Principal Issues: 1. Whether subsection 125.7(2.01) may apply in respect of (a) only actual dividends, or (b) both actual dividends and deemed dividends.
2. What is the meaning of “common share”?
3. What is the meaning of “publicly traded company”?
4. What is the meaning of “subsidiary”?
Position: 1. A “taxable dividend” is defined, for the purposes of the Act, in subsection 89(1) of the Act. A taxable dividend may include a dividend that is deemed to be paid by a provision of the Act.
2. A “common share” is defined, for the purposes of the Act, in subsection 248(1) of the Act as a share the holder of which is not precluded on the reduction or redemption of the capital stock from participating in the assets of the corporation beyond the amount paid up on that share plus a fixed premium and a defined rate of dividend. A share that does not fall within the above-noted definition is not a common share.
3. For the purposes of subsections 125.7(2.01) and (14.1) of the Act, we would consider a publicly traded company as a company the shares of the capital stock of which are listed or traded on a stock exchange or other public market. A company would include a non-resident company. The term “company” refers to a corporation and would not include a partnership or trust.
4. For the purposes of subsections 125.7(2.01) and (14.1) of the Act, we would consider a subsidiary of a publicly traded company to be a corporation over which the publicly traded corporation exercises de jure control either directly or indirectly.
Reasons: See comments.
