I-3 - Taxation Act

Section 21.32 Disposition versions

2021-06-04

21.32. A particular amount that is received by a taxpayer in a taxation year as an SLA compensation payment from a person described in the second paragraph or as a dealer compensation payment, is deemed, to the extent of the underlying payment to which the amount relates, to have been received by the taxpayer in the year as,

(a)  where the underlying payment is a taxable dividend paid on a share of the capital stock of a public corporation (other than an underlying payment to which subparagraph b applies), a taxable dividend on the share and, if the particular amount has the characteristics described in the third paragraph, an eligible dividend on the share;

(b)  where the underlying payment is paid by a trust on a qualified trust unit issued by the trust,

i.  to the extent that section 663 applied to the underlying payment, an amount of the trust’s income that was paid by the trust to the taxpayer as a beneficiary under the trust and that was designated by the trust in respect of the taxpayer to the extent of a valid designation, if any, by the trust in accordance with this Part in respect of the recipient of the underlying payment, and

ii.  to the extent that the underlying payment is a distribution of a property from the trust, a distribution of that property from the trust; or

(c)  in any other case, interest.

A person to whom the first paragraph refers is

(a)  a person resident in Canada; or

(b)  a person not resident in Canada who pays the particular amount in the course of carrying on business in Canada through an establishment.

The characteristics to which the first paragraph refers in respect of the particular amount are the following:

(a)  the amount is deemed, under the first paragraph, to be a taxable dividend; and

(b)  the amount is received by a person resident in Canada as

i.  compensation for an eligible dividend, or

ii.  compensation for a taxable dividend, other than an eligible dividend, paid by a corporation to a shareholder not resident in Canada in circumstances where it may reasonably be considered that the corporation would, if that shareholder had been resident in Canada, have designated the dividend as an eligible dividend under subsection 14 of section 89 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) for the purposes of that Act.

However, the first paragraph does not apply in respect of an amount received

(a)  as proceeds of disposition of a property, or

(b)  by a person under an arrangement where it may reasonably be considered that one of the main reasons for the person entering into the arrangement was to enable the person to receive an SLA compensation payment pursuant to a securities lending arrangement, or a dealer compensation payment, that would be deductible in computing the person’s taxable income, or not included in computing the person’s income, for any taxation year.

1991, c. 25, s. 5; 1996, c. 39, s. 20; 1997, c. 3, s. 71; 2009, c. 5, s. 35; 2015, c. 24, s. 18; 2021, c. 18, s. 17.

2015-10-26

21.32. A particular amount that is received by a taxpayer in a taxation year as an SLA compensation payment from a person described in the second paragraph or as a dealer compensation payment, is deemed, to the extent of the underlying payment to which the amount relates, to have been received by the taxpayer in the year as,

(a)  where the underlying payment is a taxable dividend paid on a share of the capital stock of a public corporation (other than an underlying payment to which subparagraph b applies), a taxable dividend on the share and, if the particular amount has the characteristics described in the third paragraph, an eligible dividend on the share;

(b)  where the underlying payment is paid by a trust on a qualified trust unit issued by the trust,

i.  to the extent that section 663 applied to the underlying payment, an amount of the trust’s income that was paid by the trust to the taxpayer as a beneficiary under the trust and that was designated by the trust in respect of the taxpayer to the extent of a valid designation, if any, by the trust in accordance with this Part in respect of the recipient of the underlying payment, and

ii.  to the extent that the underlying payment is a distribution of a property from the trust, a distribution of that property from the trust; or

(c)  in any other case, interest.

A person to whom the first paragraph refers is

(a)  a person resident in Canada; or

(b)  a person not resident in Canada who pays the particular amount in the course of carrying on business in Canada through an establishment.

The characteristics to which the first paragraph refers in respect of the particular amount are the following:

(a)  the amount is deemed, under the first paragraph, to be a taxable dividend; and

(b)  the amount is received by a person resident in Canada as

i.  compensation for an eligible dividend, or

ii.  compensation for a taxable dividend, other than an eligible dividend, paid by a corporation to a shareholder not resident in Canada in circumstances where it may reasonably be considered that the corporation would, if that shareholder had been resident in Canada, have designated the dividend as an eligible dividend under subsection 14 of section 89 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) for the purposes of that Act.

However, the first paragraph does not apply in respect of an amount received

(a)  as proceeds of disposition of a property, or

(b)  by a person under an arrangement where it may reasonably be considered that one of the main reasons for the person entering into the arrangement was to enable the person to receive an SLA compensation payment or a dealer compensation payment that would be deductible in computing the person’s taxable income, or not included in computing the person’s income, for any taxation year.

1991, c. 25, s. 5; 1996, c. 39, s. 20; 1997, c. 3, s. 71; 2009, c. 5, s. 35; 2015, c. 24, s. 18.

2009-05-15

21.32. For the purposes of this Part, any amount received as compensation for a taxable dividend paid on a qualified security that is a share of the capital stock of a public corporation is, to the extent of the amount of such dividend, deemed to have been received from the corporation as a taxable dividend on the share and, if the amount has the characteristics described in the second paragraph, as an eligible dividend on the share, if it has been received

(a)  under a securities lending arrangement from a person resident in Canada, or a person not resident in Canada where, in the latter case, the amount was paid in the course of carrying on business in Canada through an establishment, or

(b)  from or by a person resident in Canada who is a registered securities dealer where the amount is received or paid, as the case may be, in the ordinary course of the business of trading in securities carried on by the dealer.

The characteristics to which the first paragraph refers in respect of an amount are the following:

(a)  the amount is deemed, under the first paragraph, to be a taxable dividend; and

(b)  the amount is received by a person resident in Canada as

i.  compensation for an eligible dividend, or

ii.  compensation for a taxable dividend, other than an eligible dividend, paid by a corporation to a shareholder not resident in Canada in circumstances where it may reasonably be considered that the corporation would, if that shareholder had been resident in Canada, have designated the dividend as an eligible dividend under subsection 14 of section 89 of the Income Tax Act (R.S.C. 1985, c. 1 (5th Suppl.)) for the purposes of that Act.

However, the first paragraph does not apply in respect of an amount received

(a)  as proceeds of disposition of a property, or

(b)  by a corporation under an arrangement where it may reasonably be considered that one of the main reasons for the corporation entering into the arrangement was to enable it to receive an amount that would, but for this subparagraph, have been deemed, under this section, to be a dividend.

1991, c. 25, s. 5; 1996, c. 39, s. 20; 1997, c. 3, s. 71; 2009, c. 5, s. 35.

2006-03-01

21.32. For the purposes of this Part, any amount received as compensation for a taxable dividend paid on a qualified security that is a share of the capital stock of a public corporation is, to the extent of the amount of such dividend, deemed to have been received from the corporation as a taxable dividend on the share, if it has been received

(a)  under a securities lending arrangement from a person resident in Canada, or a person not resident in Canada where, in the latter case, the amount was paid in the course of carrying on business in Canada through an establishment, or

(b)  from or by a person resident in Canada who is a registered securities dealer where the amount is received or paid, as the case may be, in the ordinary course of the business of trading in securities carried on by the dealer.

However, the first paragraph does not apply in respect of an amount received

(a)  as proceeds of disposition of a property, or

(b)  by a corporation under an arrangement where it may reasonably be considered that one of the main reasons for the corporation entering into the arrangement was to enable it to receive an amount that would, but for this subparagraph, have been deemed, under this section, to be a dividend.

1991, c. 25, s. 5; 1996, c. 39, s. 20; 1997, c. 3, s. 71.