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.
XXXXXXXXXX
Attention: XXXXXXXXXX
Dear Sirs:
RE: Subsection 70(2) of the Act
This is in reply to your letter of July 26, 1993 concerning the treatment of dividends declared and unpaid at the time of death of a taxpayer.
As stated in paragraph 12 of Interpretation Bulletin IT-212R3, a dividend declared but not paid before the taxpayer's death is a right or thing if the ex-dividend date, (or, if none, the date of record) was prior to the date of death. Pursuant to subsection 82(1) of the Act, dividends received in a year must be included in the taxpayer's income for that year. As a consequence, a dividend declared before the taxpayer's death and not received at that time is a right or thing because it is an amount due to the deceased person.
The same paragraph mentions that it is the department's position that a dividend which is a right or thing is subject to the «normal gross up and credit» provisions. We agree with your conclusion that a right would not be taxable to the estate where it has been included in the deceased taxpayer's income pursuant to subsection 70(2) of the Act.
There is no specific required documentation to file with the return reporting a dividend as a right to support it is a right. A note explaining your calculation would generally be sufficient. Your local District Office can provide assistance in a specific case.
The above comments reflect an expression of opinion only and are not binding on the Department, as explained in paragraph 21 of Information Circular 70-6R2. We trust, however, that they are of assistance.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate
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