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22 September 2016

Ron Dueck presents paper at CTF BC Tax Conference on new rules governing inter-corporate dividends

Farris partner Ron Dueck co-authored and presented a paper at the Canadian Tax Foundation’s 2016 British Columbia Tax Conference on the topic of how corporations can navigate the new rules under subsection 55(2) of the Income Tax Act to ensure that otherwise tax-free inter-corporate dividends will not become taxable.  The paper provided a framework for the application of the new rules, and addressed the application of the rules to the following five common scenarios:

  • Dividends paid by an operating company to a parent company to be redeployed in the group or distributed to the shareholders;
  • Dividends paid by an operating company to a parent company which proceeds are then loaned back to the operating company on a secured basis;
  • Dividends paid to purify a company so that it meets the definition of a small business corporation to enable shareholders to access the lifetime capital gains deduction;
  • Deemed dividends arising on the redemption of shares in the context of wasting freezes; and
  • Dividends and deemed dividends paid when assets or a business is transferred from one corporation in a group to another.

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