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.
| |
August 17, 1989 |
| Assessing and Enquiries |
Specialty Rulings |
| Directorate |
Directorate |
| Trust and SER Assessing Section |
T. Harris |
| |
957-2128 |
| Attention: D.I. Wyse |
Your file: Hav 4533-3-4 |
| |
File No. 7-4103 |
Subject: Capital Dividend Account Paragraph 89(1)(b)
This is in response to your memorandum of July 6, 1989 wherein you requested our views concerning the treatment of capital gains reserves when computing a corporation's capital dividend account (CDA) under paragraph 89(1)(b) of the Income Tax Act (the "Act").
You have indicated that you interpret paragraph 11 of Interpretation Bulletin IT-66R5 to mean that a reserve claimed under subparagraph 40(1)(a)(iii) CDA immediately before a dividend is paid or becomes payable and that any reserve that will be claimed at the end of that taxation year must also be reflected in the calculation.
In our view a reserve claimed under subparagraph 40(1)(a)(iii) of the Act at the end of a taxation year should be brought back into income at the commencement of the subsequent taxation year end, as such, may be included in the CDA calculation at any time in the subsequent taxation year. Also, as stated in paragraph 11 of IT-66R5, the amount of any additional reserve to be claimed at the end of the subsequent taxation year should be reflected in the CDA calculation. Accordingly, we agree with your interpretation of this provision and the example cited in your memorandum.
ChiefCorporate Reorganizations III SectionReorganizations and Non-Resident DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch
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