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.
QUESTION I 58
Deemed Dividend on Winding-Up
On the winding-up of a closely-held taxable Canadian corporation, where the provisions of subsection 88(1) of the Act "do not apply, subsection 69(5) of the Act may result in the corporation's becoming liable for income tax. This liability will normally be assumed by the shareholder(s) who receive the property distributed on the winding-up. For purposes of determining the amount of any deemed dividend under the provisions of subsection 84(2) of the Act, is this liability deducted in the determination of "... the amount or value of the funds or property distributed or appropriated ..."?
DEPARTMENT'S POSITION
Our position on this matter remains as stated in response to question #34 of the Revenue Canada Round Table at the 1988 Canadian Tax Foundation Conference. The amount of the deemed dividend would be reduced by the fair market value of a corporate liability so assumed.
Prepared by: A.A. Cameron
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