11 October 2019 APFF Roundtable Q. 13, 2019-0812721C6 F - Late-Filed CDA Election

Unedited CRA Tags

83(2), 83(3)

View modes

Translation

Translation disclaimer

This translation was prepared by Tax Interpretations Inc. The CRA did not issue this document in the language in which it now appears, and is not responsible for any errors in its translation that might impact a reader’s understanding of it or the position(s) taken therein. See also the general Disclaimer below.

Principal Issues: Whether the directors of a corporation must have authorized the CDA election before the time the dividend is declared or before the late-filed CDA election is filed in order to meet the condition provided under paragraph 83(3)(c)?

Position: The directors must have authorized the late-filed CDA election before the time the election is made.

Reasons: According to the law.

FEDERAL TAX ROUNDTABLE OCTOBER 7, 2019
2019 APFF CONFERENCE

Question 13

Late CDA election

Subsection 83(3) sets out the circumstances in which a late election may be made in respect of the CDA. Paragraph (c) states: “the directors or other person or persons legally entitled to administer the affairs of the corporation have, before the time the election is made, authorized the election to be made.”

Question to the CRA

To make a late CDA election, must the directors have authorized the CDA before the time of the declaration of the dividend or before the time of the late election?

CRA Response

The condition set out in paragraph 83(3)(c) is satisfied when the directors or other person or persons legally entitled to administer the affairs of the corporation have, before the time the election is made, authorized the election to be made. In that regard, we refer you to paragraph 1.21 of Income Tax Folio S3-F2-C1, "Capital Dividends" (footnote 1).

Nathalie Aubin
(514) 496-5984
October 11, 2019
2019-081272

FOOTNOTES

Due to our system requirements, footnotes contained in the original document are reproduced below:

1 CANADA REVENUE AGENCY, Income Tax Folio S3-F2-C1, "Capital Dividends", July 25, 2019.

All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5

Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.

Text of Severed Letter

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.

Principales Questions: Whether the directors of a corporation must have authorized the CDA election before the time the dividend is declared or before the late-filed CDA election is filed in order to meet the condition provided under paragraph 83(3)(c)?

Position Adoptée: The directors must have authorized the late-filed CDA election before the time the election is made.

Raisons: According to the law.

TABLE RONDE SUR LA FISCALITÉ FÉDÉRALE DU 11 OCTOBRE 2019

APFF - CONGRÈS 2019

Question 13

Choix tardif de CDC

Le paragraphe 83(3) L.I.R. prévoit les circonstances où un choix tardif peut être fait à l’égard du compte de dividendes en capital (« CDC »). L’alinéa c) stipule : « les administrateurs ou toute autre personne qui a le droit de gérer la société ont autorisé au préalable l’exercice d’un choix ».

Question à l’ARC

Est-ce que pour faire un choix tardif de CDC, les administrateurs doivent avoir autorisé le CDC au moment préalable à la déclaration du dividende ou au moment préalable au choix tardif?

Réponse de l’ARC

La condition prévue à l’alinéa 83(3)c) L.I.R. est satisfaite lorsque les administrateurs ou autres personnes légalement habilitées à administrer les affaires de la société ont autorisé l’exercice du choix tardif avant la production du choix. À cet égard, nous vous référons au numéro 1.21 du Folio de l’impôt sur le revenu S3-F2-C1, « Dividendes en capital » (footnote 1).

Nathalie Aubin
(514) 496-5984
Le 11 octobre 2019
2019-081272

FOOTNOTES

En raison des exigences de nos systèmes, les notes de bas de page contenues dans le document original sont reproduites ci-dessous :

1 AGENCE DU REVENU DU CANADA, Folio de l’impôt sur le revenu S3-F2-C1, « Dividendes en capital », 25 juillet 2019.

Summaries

Summary Under

Tax Topics - Income Tax Act - Section 83 - Subsection 83(3)

directors can authorize a late capital dividend election after the dividend declaration

Must the advance authorization (described in s. 83(3)(c)) by the directors be made before the declaration of the dividend or merely before the late election? CRA responded:

The condition set out in paragraph 83(3)(c) is satisfied when the directors or other person or persons legally entitled to administer the affairs of the corporation have, before the time the election is made, authorized the election to be made.

CRA then referred to Folio S3-F2-C1, para. 1.21.

You are here

11 October 2019 APFF Roundtable Q. 13, 2019-0812721C6 F - Late-Filed CDA Election

View modes

Translation disclaimer