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.
S. Shinerock (613) 593-6937
May 20, 1982
Dear XXXX
We refer to your letter of March 29, 1982 in which you requested clarification of our position on the time when dividends are considered to have been paid for the purpose of the special tax of 12.5% on dividends paid after November 12, 1981.
As stated in our letter of March 19, 1982, we do not consider that amounts paid to shareholders in the course of a year with the ultimate nature of the payments to be established at some later time could be viewed as being dividends at the "time of their payment". In our opinion, such payments would merely be advances made to shareholders, and as such, chargeable to the relevant shareholder's loan account. We would not view a particular payment as being a dividend and another payment as not being a dividend at the time such a payment is made.
Essentially, it is a question of fact as to when a dividend is paid. Our position will be to look to the two following conditions to determine if a dividend was in fact paid before November 13, 1981:
(a) whether the Directors of the corporation have declared a dividend in a resolution recorded before November 13, 1981 and
(b) whether the dividend was in fact paid by the issuance of a cheque or by cash, or by Journal entry offsetting shareholders' advance accounts before the relevant date.
Yours truly,
Chief Finance, Insurance & Leasing Section Specialty Corporations Rulings Division Corporate Rulings Directorate Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1982
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1982
Email this Content