{"id":320,"date":"2013-01-07T18:00:55","date_gmt":"2013-01-07T18:00:55","guid":{"rendered":"https:\/\/thor.ca\/\/blog\/?p=320"},"modified":"2025-02-12T13:29:34","modified_gmt":"2025-02-12T21:29:34","slug":"cra-comments-on-late-eligible-dividend-designations","status":"publish","type":"post","link":"https:\/\/www.thor.ca\/blog\/2013\/01\/cra-comments-on-late-eligible-dividend-designations\/","title":{"rendered":"CRA comments on late eligible dividend designations"},"content":{"rendered":"<p>The Canadian tax system generally seeks to eliminate double tax in respect of dividends to Canadian individuals out of corporate income that was subject to either the \u201csmall business rate\u201d or the \u201cgeneral rate\u201d of corporate tax.  This is achieved through a \u201cgross-up\u201d and \u201cdividend tax credit\u201d mechanism (s. 82 and s. 121 respectively).  In order to eliminate such double taxation in respect of corporate income subject to the general rate, the applicable dividends must be \u201cdesignated\u201d by the paying corporation as \u201celigible dividends\u201d.  The designation is made by notifying the shareholders at the time the dividend is paid (s. 89(14)).  A \u201clate designation\u201d is possible under s. 89(14.1), but only if the corporation makes the designation within the 3 years of the dividend <em>and<\/em> the CRA is of the opinion that accepting the late designation would be \u201cjust and equitable\u201d.  In <a href=\"http:\/\/thor.ca\/blog\/wp-content\/uploads\/2013\/01\/2012-0445661C6.pdf\">2012-0445661C6<\/a>, the CRA said that a late designation might be accepted where, for example, a public corporation (Pubco) received a dividend from its subsidiary (Subco) and Subco inadvertently did not designate the dividend as an eligible dividend to Pubco.  The absence of a timely designation would mean the creation of a low rate income pool (LRIP) balance at the Pubco level, even though all of the underlying income in Subco was clearly taxed at the general rate.  The CRA further commented that a late designation would <em>not<\/em> be permitted in situations where a corporation deliberately or on a regular basis makes late eligible dividend designations.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Canadian tax system generally seeks to eliminate double tax in respect of dividends to Canadian individuals out of corporate income that was subject to either the \u201csmall business rate\u201d or the \u201cgeneral rate\u201d of corporate tax.  This is achieved&hellip;<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-320","post","type-post","status-publish","format-standard","hentry","category-corporate-tax"],"_links":{"self":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/320","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/comments?post=320"}],"version-history":[{"count":1,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/320\/revisions"}],"predecessor-version":[{"id":2825,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/posts\/320\/revisions\/2825"}],"wp:attachment":[{"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/media?parent=320"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/categories?post=320"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thor.ca\/blog\/wp-json\/wp\/v2\/tags?post=320"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}