Administrative Policy
28 January 2008 External T.I. 2007-0250831E5 F - Part IV.1 and VI.1 Taxes - Subsection 55(2)
application of Pt. IV.1 tax to a deemed dividend is ousted to the extent s. 55(2) applies
After finding that s. 55(2) would apply to the deemed dividend arising on the redemption of preferred shares of a CCPC held by an unrelated public corporation, CRA stated:
[A] corporation is liable to pay Part IV.1 tax in respect of dividends, other than "excluded dividends", received by it in the year on a taxable preferred share, to the extent that an amount in respect of those dividends is deductible in computing its taxable income for the year under, inter alia, section 112. Section 187.2 would therefore not apply to a dividend amount that would be deemed not to be a dividend received by the corporation by virtue of subsection 55(2).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 191 - Subsection 191(4) | s. 191(4) unavailable where redemption occurred subsequently to reduction in redemption amount pursuant to a price adjustment clause | 370 |
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3) - Paragraph 55(3)(a) - Subparagraph 55(3)(a)(i) | s. 55(3)(a)(i) exception does not apply to a redemption of a preferred share giving rise to a deemed dividend irrespective of conversion of that dividend to capital gain | 358 |
| Tax Topics - Income Tax Act - Section 191.1 - Subsection 191.1(1) - Paragraph 191.1(1)(a) | dividend subject to s. 55(2) can also be subject to Pt. VI.1 tax | 110 |