CRA comments on whether the premium on the redemption of foreign affiliate shares is a dividend or proceeds of disposition

In 2014-0528361E5, the CRA responded to a query in respect of previous Rulings document 2012-0439741I7 which had indicated that the premium on redemption of certain foreign affiliate shares (mandatory redeemable preference shares) would be characterized as a dividend.

The CRA acknowledged that Rulings document 2012-0439741I7 does not reflect the views of the CRA and that in the absence of an election under subsection 93(1) of the Income Tax Act, proceeds from the redemption of foreign affiliate shares are treated as proceeds of disposition.

Prepared by: Asif Abdulla

Asif Abdulla is a partner working out of the Vancouver office of Thorsteinssons LLP. He practices in the area of domestic and international tax planning for individuals, trusts, corporations and other private enterprises with a view to achieving tax efficiency… more »

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