Dividend

Table of Contents

Cases

Delage v. Canada, 2002 DTC 7061, 2002 FCA 212

The taxpayers were unable to establish that an amount paid to them as a dividend was, in fact, salary for services.

Dale v. Canada, 97 DTC 5252, [1997] 2 CTC 286 (FCA)

At the time of a purported capital dividend on preference shares, the authorized capital of the corporation had not yet been amended to include...

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Locations of other summaries Wordcount
Tax Topics - General Concepts - Effective Date retroactive superior court order has retroactive effect for tax purposes 174
Tax Topics - General Concepts - Rectification & Rescission retroactive effect of nunc pro tunc rectification order 177
Tax Topics - Income Tax Act - Section 83 - Subsection 83(2) 78
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) retroactive validation by Superior Court of preference share issuance was effective for s. 85 purposes 171
Tax Topics - Statutory Interpretation - Provincial Law 140

M.S.S. Inc. v. The Queen, 87 DTC 5088, [1987] 1 CTC 130 (FCTD), aff'd 89 DTC 5502 (FCA)

Alleged management fees paid by the taxpayer to its parent corporation were found in reality to be dividends, as no management services had been...

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The Queen v. Cranswick, 82 DTC 6073, [1982] CTC 69 (FCA)

The income which is typically earned by shares is dividends. A payment on shares that was of an unusual and unexpected kind, i.e., a voluntary...

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Words and Phrases
dividend

Bernstein v. MNR, 74 DTC 6041, [1974] CTC 4 (FCTD), aff'd 77 DTC 5187, [1977] CTC 328 (FCA)

The sale by a corporation to its shareholders (Bernstein and Kamichik) of shares of a subsidiary worth $100,000 for a sale price of $200, was not...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) no reorganization of corporation 72

Guilder News Co. (1963) Ltd. v. MNR, 73 DTC 5048, [1973] CTC 1 (FCA)

At 5053:

"[M]any of the amounts that would fall under section [15(1)] would not fall within the concept of 'dividend' in its ordinary sense in...

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Words and Phrases
dividend
Locations of other summaries Wordcount
Tax Topics - General Concepts - Effective Date 229
Tax Topics - Income Tax Act - Section 121 13
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) restoration of previous year's detriment was benefit 231

Gabco Ltd. v. MNR, 68 DTC 5210, [1968] CTC 313 (Ex Ct)

In finding remuneration paid to the younger brother of the principal of a corporation in proportion to a shareholding to be deductible, Cattanach...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 67 "unreasonable" if no reasonable business would have paid it 196

See Also

Ahmad v. The Queen, 2013 DTC 1112 [at 601], 2013 TCC 127 (Informal Procedure)

Before finding that a distribution in kind by a Bermudan corporation ("Tyco") was a taxable dividend to the taxpayer under s. 90, Rip CJ quoted...

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Words and Phrases
dividend
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(1) dividend in kind on US spin-off 115

Marshall v. The Queen, 2011 DTC 1353 [at 1976], 2011 TCC 497

The taxpayer was a shareholder of a Bermudian corporation ("Tyco"), and received shares as part of the same spin-off described in Capancini, where...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(1) 125

Capancini v. The Queen, 2010 DTC 1394 [at 4569], 2010 TCC 581 (Informal Procedure)

Under a reorganization, the Canadian-resident taxpayer received, in exchange for shares he previously held of Tyco International Ltd. (a...

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Words and Phrases
dividend
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(1) 134

Mulligan v. The Queen, 99 DTC 951, [1999] 3 CTC 2092 (TCC) (Informal Procedure)

Before going on to find that the taxpayer had received a dividend notwithstanding the absence of formal corporate action by the directors (i.e.,...

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Memec plc v. IRC, [1998] BTC 251, [1998] EWCA Civ 941 (CA)

In order to minimize German corporate tax payable by its German subsidiary ("GmbH"), the taxpayer "Plc"), which was a UK company, formed a silent...

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Words and Phrases
dividend
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 96 German silent partnership not a partnership: purely contractual right with no participation in business 352

Canadian Pacific Ltd. (1990), 72 OR (2d) 545 (Ont HCJ.)

A proposed distribution by a public company to its common shareholders of a subsidiary pursuant to a butterfly reorganization was found to...

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Anderson v. The Queen, 98 DTC 1027 (TCC)

Amounts paid to the taxpayer one day prior to the sale of their shares to the purchaser were found to be dividends rather than remuneration or...

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Daggett v. MNR, 93 DTC 14, [1992] 2 CTC 2764 (TCC)

The purported payment of a dividend was ineffective because payment of a dividend would have impaired the capital of the corporation contrary to...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 55 - Subsection 55(1) 83

Re Telsten Services Ltd. (1981), 39 C.B.R. (N.S.) 68 (S.C.O.)

Payments made to a company's shareholder that were treated in the company's books as dividends, were not dividends for purposes of the Bankruptcy...

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Canadian Pacific Ltd. (1990), 72 OR (2d) 545 (Ont HCJ.)

A proposed distribution by a public company to its common shareholders of a subsidiary pursuant to a butterfly reorganization was found to...

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Cangro Resources Ltd. v. MNR, 67 DTC 582 (TAB)

A payment received by the taxpayer that was stated to be made out of "paid-in capital and paid-in surplus" pursuant to the provisions of the...

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Words and Phrases
dividend
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) 118
Tax Topics - Income Tax Act - Section 90 - Subsection 90(1) distributions out of share premium based on number of shares held were dividends 231

Administrative Policy

11 April 2017 Internal T.I. 2016-0670541I7 - Foreign affiliate share redemption

Canco held the preferred, but not the common, shares of a Barbados International Business Company (“FA”), and its preferred shares were...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(2) portion of proceeds paid on a redemption might be respected as a dividend (subject to s. 95(6)) if this is clearly indicated in accordance with Barbados law 303
Tax Topics - Income Tax Act - Section 95 - Subsection 95(6) - Paragraph 95(6)(b) skewing exempt surplus to Canco could engage s. 95(6) 137

25 August 2014 External T.I. 2014-0528361E5 - premium on redemption of foreign affiliate shares

After noting that in 2012-0439741I7 [immediately below] "we indicate that upon redemption of MRPS [mandatory redeemable preference shares], the...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(1) redemption premium is proceeds 82

30 April 2013 Internal T.I. 2012-0439741I7

Mandatory Redeemable Preferred Shares ("MRPS"): are voting; have a mandatory redemption date approximately 10 years from the allotment date, with...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Share treatment of MRPS as equity 193
Tax Topics - Income Tax Act - Section 90 - Subsection 90(1) treatment of MRPS as equity 211

16 April 2012 External T.I. 2011-041149

A Canadian-resident individual owns all the shares of an Alberta unlimited liability company which, in turn, owns a majority of the membership...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 246 - Subsection 246(1) 246(1) application to payment of individual's US taxes by grandchild LLC 114

22 January 1997 External T.I. 9701295 - Dividend in kind - U.S. divestiture

In indicating that a dividend in kind received by a Canadian shareholder from a U.S. corporation would be taxable, RC stated:

"It is our view that...

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8 April 2004 Internal T.I. 2003-0037291I7 - US LLC and Regulation 5907(1.3)

A wholly-owned US C-corp subsidiary (US Holdco) of a taxable Canadian corporation wholly-owned two LLCs, which earned only foreign accrual...

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10 March 2003 Internal T.I. 2002-0172187 F - DEDUCTIBILITE DES INTERET

A debenture issued by a corporation provided for the payment of base interest plus the payment of an “additional interest” on maturity that...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(i) interest on debenture issued in payment of interest, was non-deductible 118
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(f) premium (termed additional interest”) was payable even if no early repayment, and qualified under s. 20(1)(f) 200
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) reiteration of position re deductibility of participating interest post-Sherway 91
Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(a) - Legal and other Professional Fees legal fees re repaying debt were non-deductible 21

8 January 1996 External T.I. 9428025 - RETURN OF CAPITAL FROM A DELAWARE CORPORATION

It is the Department's view that a dividend can include any distribution of property by a corporation to its shareholders that is not a return of...

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Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 90 - Subsection 90(1) all distributions from Delaware corps are dividends 92
Tax Topics - Income Tax Act - Section 90 - Subsection 90(3) all distributions from Delaware corps are dividends 92
Tax Topics - Treaties - Income Tax Conventions - Article 10 108

16 May 1994 External T.I. 9404565 - COURT ORDERED CORPORATE DISTRIBUTION

A court order directing a corporation to pay a "dividend" to an inactive shareholder in order to compensate him for the undue depletion of the...

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5 September 89 T.I. (February 1990 Access Letter, ¶1101)

Interest on the preferred share of a Quebec cooperative falls within the definition of a "dividend" as a sum to be divided among a group of...

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IT-67R3 "Taxable Dividends from Corporations Resident in Canada"

"Any distribution by a corporation of its income or capital gains made pro rata among its shareholders may properly be described as a dividend...

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Articles

John R. Owen, "Foreign Entity Classification and the Character of Foreign Distributions", 2005 Conference Report, c. 20

Discussion of the nature of a dividend.

Wertschek, "The Tax Advisor and Commercial Law: Some Issues", 1993 Conference Report, C. 24

Discussion (at pp. 9-12) of whether amounts paid as dividends in contravention of the governing corporate law will retain their character as...

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