If subsection 55(2) applies to a dividend, and the cash related to the dividend needs to be paid to an individual shareholder anyway, the shareholder will likely be better off compared to the situation obtained when the subsection does not apply. The author provides a table comparing the two results and shows that an individual at the top marginal rate in Ontario would receive $710 after tax where subsection 55(2) applied to the relevant dividend compared to $523 where it did not.
Will the amended GAAR apply where 55(2) is deliberately triggered? The prudent planner will need to consider the matter carefully.
Bukola Abdul “When Subsection 55(2) Is Less Onerous Than Expected” Canadian Tax Focus 16:2 (May 2026)
