CRA confirms that s. 191(4) specified amounts must be crystallized dollars, and that a PAC can increase a redemption amount above the specified amount

CRA indicated that the objective of s. 191(4) would be defeated if the issuer could specify the amount by way of a formula or simply indicate that the specified amount equalled the fair market value of the consideration for the share – and adjusting the specified amount under a price adjustment clause (PAC) was equally problematic.

CRA maintained its position that, in order for its value to have been specified, the specified amount must be expressed as an actual dollar amount and not as a formula, and it must not be subject to change pursuant to a PAC or otherwise.

Where a PAC operated to increase the share redemption amount so as to equal or exceed the specified amount, this would not result in the deemed dividend being disqualified as an excluded dividend – although by virtue of s. 191(5), the excess of the dividend over the specified amount would not qualify as an excluded dividend. However, where the PAC instead reduced the redemption amount to less than the specified amount, the entire amount of the deemed dividend would be disqualified from being an excluded dividend.

Neal Armstrong. Summary of 2 December 2025 CTF Roundtable, Q.9 under s. 191(4).