Principal Issues: 1. When subsection 125.7(2.01) of the Act applies, is the loss of entitlement to the wage subsidy provided by subsection 125.7(2) of the Act 100% of the wage subsidy amount for a qualifying period even if the amount of the dividend is less than the amount of the wage subsidy the entity would otherwise be entitled to?
2. What taxable dividends are relevant for subsection 125.7(14.1) of the Act?
3. Subsection 125.7(14.1) of the Act may require the repayment of the wage subsidy provided by subsection 125.7(2) of the Act to the extent of any dividend paid. How does this apply? Do public companies have to determine what proportion of dividends are paid to an individual?
4. In what situations does subsection 125.7(14.1) of the Act apply since subsection 125.7(2.01) of the Act seems to apply in the same circumstances?
Position: 1. Where subsection 125.7(2.01) of the Act applies, the entity is precluded from claiming the wage subsidy provided by subsection 125.7(2) of the Act irrespective of the amount of dividends paid.
2. The relevant dividends for the purpose of subsection 125.7(14.1) of the Act are taxable dividends paid by the eligible entity, on its common shares, in qualifying period 24 and subsequent qualifying periods. Paragraph (b) of the description of Variable A in the formula contained in subsection 125.7(14.1) of the Act represents the amount of those common share dividends paid by the eligible entity to individuals.
3. Subsection 125.7(14.1) of the Act considers the amount of taxable dividends paid by the eligible entity on its common shares to holders who are individuals. The eligible entity must determine this amount.
4. Subsections 125.7(2.01) and (14.1) of the Act both apply where a publicly traded company (or a subsidiary of such a company) pays certain dividends. The legislation does not prevent subsections 125.7(2.01) and (14.1) of the Act from incorporating the same dividends in their respective operations.
Reasons: Textual, contextual and purposive interpretation of the law.
