16 April 1993 Income Tax Severed Letter 9309585 - Part IV.1 Tax

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.

                                                    5-930958
                                                    S.J. Tevlin
XXXXXXXXXX                                          (613) 957-2746

Attention: XXXXXXXXXX

April 16, 1993

Dear Sirs:

Re: Subsection 191(4) of The Income Tax Act (Canada) (the "Act")

We are writing in response to your letter of March 29, 1993 in which you requested our opinion as to whether, for purposes of subsection 191(4) of the Act, a dividend payment on a share that is subject to a price adjustment clause will be considered an excluded dividend.

It is the Department's view that for purposes of subsection 191(4) of the Act the terms or conditions of the share or agreement in respect of the share must specify an actual dollar amount, which in the absence of a different amount will be the amount for which the share is to be redeemed, acquired or cancelled. Once an amount is specified for purposes of subsection 191(4) then this amount cannot be changed at a later date.

However, by specifying an amount, the corporation is not precluded from redeeming the share for a greater amount, but the amount of the excess will not qualify as an excluded dividend or an excepted dividend by virtue or subsection 191(5) of the Act.

Yours truly,

for Director Financial Industries Division Rulings Directorate Legislative and Intergovernmental Affairs Branch