24 September 1993 Income Tax Severed Letter 6326355 - Amount of Stock Dividend

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.

                                           932635
XXXXXXXXXX                                 Olli Laurikainen
                                           (613) 957-2116

September 24, 1993

Dear Sirs:

Re: Stock Dividends Received from a Non-resident Corporation

This in reply to your letter dated July 31, 1993 and further to our earlier correspondence.

It is our view that the amount of any stock dividends received by you from XXXXXXXXXX are included in your income for income tax purposes pursuant to section 90 and paragraph 12(1)(k) of the Income Tax Act (the "Act). Generally, the "amount" of a stock dividend (defined in subsection 248(1) of the Act) is the amount by which the paid-up capital of the corporation that paid the dividend is increased by reason of the payment of the dividend. The increase in the paid-up capital of a corporation attributable to a stock dividend is determined under corporate law.

In the event there is no increase in the paid-up capital of a corporation as a result of a stock dividend, the amount of the dividend would be nil and there would be no income inclusion under section 90 and paragraph 12(1)(k) of the Act.

We hope the above is of assistance to you.

Yours truly,

for Director Reorganizations and Foreign Division Rulings Directorate Legislative and Intergovernmental Affairs Branch