When subsection 55(2) applies, the inter-corporate dividend is converted to proceeds of disposition, resulting in a taxable capital gain. Under the old rule, certain way of inter-corporate transactions can create a tax free inter-corporate dividend even though the capital gain should be recognized if the transaction is done in a more direct way.
In Budget 2015, federal government proposed an amendment subsection 55(2) so such inter-corporate transactions cannot be converted into tax-free dividends. Such amendment is carried forward to Budget 2016 and confirmed its implementation.
There are five main changes to the rules:
For more information, please contact us @ 604-639-3229 or email@example.com
Note: All information relating to s.55(2) above is available from Government of Canada website.
By Theresa Lo, CPA, CGA
October 11, 2017
Please check out our News section for the most updated info in regards of our firm.
Call us at +1 604 639-3229+1 604 639-3229 with any questions or to schedule an appointment.
Or you may use our contact form.
Theresa Lo, CPA
Suite 200, 5050 Kingsway
Burnaby, British Columbia