Principales Questions: 1. Whether subsection 55(2) (as provided for in the Legislative Proposal of July 31, 2015) will apply with respect to the redemption of shares when the amount of the deemed dividend does not exceed the income earned or realized as described in new paragraph 55(2.1)(c).
2. When shares are redeemed and there is a deemed dividend pursuant to subsection 84(3), whether the amount equal to the income earned or realized as described in new paragraph 55(2.1)(c) can be considered as a separate taxable dividend pursuant to paragraph 55(5)(f).
3. When shares are redeemed and there is a deemed dividend pursuant to subsection 84(3), whether a separate taxable dividend that exceeds the amount described in new paragraph 55(2.1)(c) would result in a capital gain.
Position Adoptée: 1. No.
2. Yes, if the corporation designates that amount in its return of income under Part I for the taxation year during which the dividend was deemed to be received.
3. Paragraph 55(2)(b) would deem that amount to be included in the proceeds of disposition of the shares redeemed.
Raisons: 1. Wording of the Legislative Proposals.
2. Wording of the Act.
3. Wording of the Legislative Proposals.