The CRA has “retired” the shortcut method for excess CDA elections. It is now necessary to wait for the Part III assessment and then file an election under subsection 184(3) of the Income Tax Act (Canada) in respect of the…
CDA addition for Benco
A corporate beneficiary of a trust can add an amount to its CDA in respect of a capital gain realized by the trust only if the trust allocates the entire capital gain to the corporation. Moreover, the addition can only…
Timing of Corporate Partner’s CDA Increase
The CRA has stated that, when a partnership receives a capital dividend, a corporate partner’s capital dividend account increases at the time of the receipt of the dividend or at the end of the partnership’s fiscal period depending on the…
CDA timing strategies
After noting the Court’s comments Gladwin Realty Corporation v Canada, 2020 FCA 142, aff’g 2019 TCC 62, at ΒΆ76, the authors conclude “that CDA timing strategies are not offensive in general”. Capital dividends can be paid immediately after the realization…
Excess CDA election
A corporation purports to pay a capital dividend, but a portion of the dividend is in excess of the balance of the corporation’s capital dividend account (CDA). The corporation pays Part III tax on the excess rather than elect under…
CDA surplus stripping
Can a corporation trigger capital gains deliberately to increase its CDA and, as a result, facilitate surplus stripping? Using 55(2) for this purpose might problematic because of issues with the purpose test. A share exchange might be problematic as well.…
CDA timing and GAAR
If a corporation triggers a capital gain, pays a capital dividend using the resulting CDA balance and then triggers a capital loss that, in effect, offsets the gain, does the GAAR apply? In Gladwin Realty Corporation v R, 2019 TCC…
CDA timing
A corporate-recipient of a capital dividend is entitled to add the amount of the dividend to its capital dividend account at the time the dividend is received even where the relevant election is late-filed. CRA technical interpretation 2017-0718311E5.
Amalgamations and CDA
From question 6 of the 2015 APFF Roundtable, it appears that the positive capital dividend account balance created by Subco’s realization of a capital gain could be paid to Parentco and then to Parentco’s shareholders as a capital dividend even…